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November 7, 2022
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Effect of Capital Flight on Economic Growth in Nigeria

Tags : Capital Flight Economic growth Net foreign investment

Category : Latest Publications

EFFECT OF CAPITAL FLIGHT ON ECONOMIC GROWTH IN NIGERIA

Agbo, Innocent Sunny¹ & Gina Oghogho Olufemi²

Department of Accounting

Igbinedion University, Okada

Mail: blessedsamsun@gmail.com; atugina18@gmail.com

Abstract

The study examined the effect of capital flight on economic growth in Nigeria and the study proxies capital flight using net foreign investment and gross domestic product. These methodologies are superior to the OLS for many reasons. The study employed a descriptive and time series research design, which is a very important in determining the relationship between time-series variables. The population of the study consist of all data on capital flight and economic growth from Central Bank of Nigeria Statistical Bulletin. For the purpose of the research, a sample size from 1981 to 2019 is selected from the CBN Statistical Bulletin in order to determine the relationship between the variables. The Descriptive Statistics, Correlation Matrix and Fully Modified Least Squares regression technique were adopted to analyse the relationship between the variables. The results reveal that the effect of NFI on RGDP is negative and across all the estimations and significant in DOLs at 5% and FMOLS at 10%. Based on the findings of the study, the recommendation is to keep an eye on net foreign investments, make sure that more investments are brought into Nigeria, and make sure that these channels for foreign investment are not used to transfer capital to other countries.

Keywords: Capital flight, Net foreign investment and economic growth

INTRODUCTION

Through Direct Portfolio Investment (DPI) or Foreign Direct Investment (FDI), successive Nigerian governments have continued to advocate for capital influxes as a means of boosting economic growth. This is based on the requirement of obtaining sufficient funding to supplement the limited current financial position with financial growth. According to Murphy (2004), capital flight is the movement of money and investments outside of a country to a location where individuals believe the assets will be safe for their use, with the intention of concealing the capital from authorities. It is viewed as the massive transfer of currency from one nation to another, which represents the outflow of financial resources.

According to England, Oputa, Ogunleye, & Omotosho (2007), capital flight includes all illegal flows that are designed to disappear from records in the country of origin as well as earnings on the stock of illegal capital movement outside of a country that typically do not return to the country of origin as in the case of Nigeria. When economic fundamentals are deemed unsuitable for investment within the domestic economy, economic agents divert their capital away from domestic economies in order to avoid extremely high losses on their domestic assets. According to research, investors will move their capital away from nations with high sovereign risk and uncertainty in order to avoid investing in economic climates that are uncertain.

According to Onwioduokit (2007), capital flight, whether normal or abnormal, has a negative impact on the economy of the source or domestic nation. Domestic investment is significantly and negatively impacted by capital flight. According to World Bank (1985), the implication is that the movement of capital abroad leaves little or no resources for financing domestic investment. It is generally acknowledged that the African continent faces a significant challenge due to a lack of funds to finance economic development. Hence uplifting consistent activity and inflow of unfamiliar capital by the method of unfamiliar speculation can’t be over stressed to connect the current asset hole in the underdeveloped nations. If it were possible, the economic burden of capital flight would be lifted, leaving more resources available for poverty alleviation. According to Orji, Ogbuabor, Kama, and Anthony-Orji (2020), capital flight has a negative impact on economic growth. Wujung and Mbella (2016) likewise tracked down a negative huge connection between capital flight and economy development; Lawal, Kazi, Adeoti, Osuma, Akinmulegun, and Ilo (2017), who discovered a negative impact between the variables, also supported this. Makwe and Oboro (2019) discovered a strong connection; Bredino, Fiderikumo, and Adesuji (2018) discovered a negative effect. According to Adedayo and Ayodele (2016), the variables have a significant positive effect. This suggests that the Nigerian economy benefits from an increase in the exchange rate as a result of the increase in capital flight into the economy. This study aims to determine the effects of capital flight—foreign direct investment, interest rates, and foreign reserves—on economic expansion as a result of the preceding. The research critically examines the effect of capital flight on economic growth in Nigerian, using net foreign investments and Gross Domestic Product in Nigeria.

LITERATURE REVIEW

Capital Flight

Capital flight does not generally have a defined definition; However, its activities can be traced all the way back to the 17th century. Because there are many different definitions of capital flight, calculating it will produce different results. Because the term has been used interchangeably between developed and developing nations, the lack of a widely accepted definition of capital flight has resulted in a controversy. As a result, some schools of thought classify capital outflows from developed nations as foreign direct investment, whereas residents of emerging nations classify the same activity as capital flight (Ajayi, 2003). However, it is important to emphasize that the purpose for which an inflow or outflow has been used is what makes the difference. The assertion that foreign investors from advanced nations are swayed by better opportunities elsewhere and that investors from emerging nations are presumed to be evading the perceived high risk associated with investments, which is a characteristic of some emerging nations, is the foundation of the aforementioned dichotomy. It is a common belief that all investors, regardless of whether they are from a developed or developing nation, are rational and will base their decisions on the relative returns and risks associated with investing.

According to Schneider (2013), capital flight is the portion of resident capital outflow that is driven by political and economic uncertainty. Mahon (1996) argues in his own contribution that capital flight is a means of safeguarding savings from the depredations of corrupt politicians. According to Otene (2010), capital flight is the movement of large sums of money between nations in order to escape political or economic turmoil or seek higher returns. Helleiner (2005) defines capital flight as “an outflow of capital that is not part of normal commercial transactions” from a nation with a relatively low capital stockpile. According to Chipalkatti and Rishi (2001), capital flight is defined as any private capital outflows that result in the acquisition of foreign assets by a nation’s citizens. The motivations of capital holders form the basis of this definition. It assumes that an individual does not have complete control over capital, but rather that it is subject to intricate and adaptable social control. The behavior of a risk-averse individual who diversifies their wealth to maximize returns is directly linked to capital flight. As part of portfolio diversification, this informs the decision to hold assets overseas (Lensink, Hermes, & Murinde, 1998).

This decision is influenced by the amount of wealth, risk and uncertainty, differences in return rates between domestic and foreign asset holdings, and other factors. Macroeconomic instability, political instability, capital stock, and real interest rate differentials, which occur when aggregate domestic demand exceeds aggregate domestic supply structurally, influence individual portfolio diversification decisions. Capital flight, as defined by Ramachanran (2006), refers to the exodus of a nation’s wealth, savings, and financial and capital assets. A country’s macroeconomic instability can manifest itself in a variety of ways, including the following: Current account deficits and budget deficits rise, exchange rate overvaluation occurs, and inflation rises. Expectations of tax-like distortions like exchange rate devaluation rise as a result of macroeconomic instability.

Nigeria Economy

The overall economic activity in Nigeria has experienced crises that have had devastating effects on global commodity prices as a result of the global economic recession. These crises have presented the economy of Nigeria with a number of obstacles. This subsequently created structural imbalances occasioned by the collapse of oil prices which adversely affected the Nation’s revenue (Obansa, Okoroafor, Aluko, & Eze, 2010).

Every attempt by Nigerian policymakers to contain these waves of external shocks has been accompanied by the implementation of one economic reform or another. The Structural Adjustment Program (SAP) was launched by the Nigerian government by the middle of 1986.The SAP’s goal was to resolve the crises and get the economy moving in the right direction. There were a number of different kinds of corrective actions taken, including financial sector reform policies. The National Economic Empowerment and Development Strategy (NEEDS), which was launched in 2004, is another policy response that has been used in the last ten years with a similar goal (Obansa, Okoroafor, Aluko, & Eze, 2010). This all-encompassing policy aims to reduce unemployment, particularly among young people, and the economy’s ever-increasing cost of living. Currently, the slogan for the economic development blueprint is “vision 20:20” (Eze; 2013). Policymakers and development partners have focused primarily on macroeconomic policy and economic growth in relation to interest rates, exchange rates, and inflation rates. Despite the significant progress made during the 1980s’ economic reforms, particularly in the financial system, there were still numerous unresolved economic issues; In particular, the interest rate has remained extremely high, which has had devastating effects on borrowing costs and investment costs in Nigeria. This has discouraged foreign investment (Hakkio, 2000; Jelilov, 2016).

Foreign Direct Investment and Economy Growth

According to Farrell (2008), a company’s use of technology, capital, management, and entrepreneurial skills to operate and provide goods and services in a foreign market is referred to as “foreign direct investment.” Nigeria is the third economy in Africa to welcome FDI, following Ethiopia and Egypt. The United States, the United Kingdom, China, the Netherlands, and France are among the nations that invest in Nigeria (UNCTAD (2018). Nigeria’s FDI flows in 2017 decreased by 21% to reach 3.5 billion USD. This could be due to political instability, widespread corruption, a lack of transparency, or poor infrastructure. Foreign direct investments have a negative impact on growth in the primary sector, a positive impact in manufacturing, and an ambiguous impact in the service sector. Using the Error Correction Model, Akinlo (2004) investigated how foreign direct investment affected Nigeria’s economic growth between 1970 and 2001. According to the findings, financial development had a significant negative effect on growth, possibly as a result of the high level of capital flight it generates. Private capital and foreign capital had little effect on economic growth and were not statistically significant.

Using multiple regression models, Onu (2012) investigated the effect of FDI on Nigeria’s economic growth between 1986 and 2007. Even though its contribution to GDP was very low during the time period under review, the analysis revealed that FDI has the potential to benefit the economy. Abbes, Guelli, Seghir, and Zakarya (2014) examined the FDI-economic growth causal interactions: a panel co-integration and Granger causality test case study of 65 nations. The panel co-integration revealed a disparity result during the study period, while the results demonstrate a unidirectional causality between foreign direct investment and gross domestic product. Using the ordinary least squares regression method, Adeleke, Olowe, and Fasesin (2014) investigated the impact of foreign direct investment on Nigeria’s economic growth from 1999 to 2013.The findings showed that Nigeria’s economic growth is positively impacted by inflows of foreign direct investment, which is statistically significant. John (2016) also used a multiple regression approach to examine the impact of foreign direct investment on Nigeria’s economic growth from 1981 to 2015. According to the study, foreign direct investment has a positive and significant impact on economic growth as measured by gross domestic product in Nigeria. Additionally, it was discovered that the exchange rate has a positive but not significant impact on GDP.

Empirical Review

Orji, Ogbuabor, Kama, and Anthony-Orji (2020) looked into how capital flight affected Nigeria’s economic growth. Data from the CBN statistical bulletin covering the years 1981 to 2017 were used in the analysis. The study used the Autoregressive Distributed Lag (ARDL) bounds test method. According to the study, both short-term and long-term economic growth are significantly hampered by capital flight. Money supply, credit to the private sector, and domestic investment are additional variables that have been found to have a significant impact on economic growth. The goal of the study by Anetor (2019) was to look at the macroeconomic factors that caused capital flight from Sub-Saharan African (SSA) countries between 1981 and 2015.The autoregressive distributed lag (ARDL) model was used in conjunction with secondary data from the World Bank Development Indicators (WDI) to identify the macroeconomic factors that influence capital flight from the SSA region. Economic expansion was found to have a significant negative relationship with capital flight in both the long run and the short run, according to the study’s findings. Between 1990 and 2017, Makwe and Oboro (2019) looked at how capital flight affected Nigeria’s economic growth. Cointegration analysis was used to analyze the data for both the short run and the long run, and ADF tests were used to test for the time series’ stationarity. Time series data covering these study periods were used. The ordinary least square (OLS) econometrics approach was utilized by the researchers for the purpose of data analysis. The results of the T-test showed that the proxies of capital flight and the gross domestic product, which is a proxy for economic growth, had a strong relationship. The work by Adedayo and Ayodele (2016) provides an empirical analysis of the impact that capital flight has on the economy of Nigeria. Secondary data from the National Bureau of Statistics and the Central Bank of Nigeria’s Statistical Bulletin of various issues were used in the study. The sample period from 1980 to 2014 is the subject of the empirical measurement. A Standard Least Square (OLS), Increased Dickey-Fuller unit root test and Co-mix test were embraced to do a broad examination of the embraced factors which incorporate GDP, Capital Flight and Swapping scale. The findings demonstrated that the variables have a significant positive influence. This suggests that, during the time period under consideration, the Nigerian economy will benefit from an increase in the exchange rate as a result of an increase in capital flight into the economy. Bredino, Fiderikumo, and Adesuji (2018) investigated how capital flight affected Nigeria’s economic expansion. Predicting the impact of capital flight on economic expansion has not been very successful using traditional methods. The model assessed to cover the period 1980 – 2012 was dissected utilizing joined worldwide strategy, Fake Brain Organization (ANN) as a prescient procedure and old style methods like Standard Least Square (OLS) and co-incorporation/mistake rectification techniques. According to the findings of the study, capital flight has a negative effect on GDP, while exchange rate has a positive effect on GDP, which is in line with expectations. The study by Obidike, Uma, Odionye, and Ogwuru (2015) looked at how capital flight affected Nigeria’s economic growth. It was decided to use the Autoregressive Distributed Lagged model (ARDL). Capital flight has a negative and significant impact on economic growth, as the Auto Regressive Distributed Lagged (ARDL) model revealed. The model’s parameters were found to be stable over time in the CUSUM and CUSUMSQ tests. Between 1980 and 2012, Nwakoby, Ajike, and Ezejiofor (2017) looked at how Nigerian government financial incentives affected small and medium-sized businesses (SMEs) and economic expansion between 1999 and 2015.The significant impact of SMEs’ output on the country’s economic growth was determined using straightforward regression analysis. Gross Domestic Product and loans to small and medium-sized businesses were the two variables used. According to the study, the output of SMEs in Nigeria and the expansion of the economy are significantly influenced by government spending, loans, and other credit options. Olawale and Ifedayo (2015) investigate the effects of capital flight on Nigeria’s economic expansion. Co-integration, Ordinary Least Square (OLS), and Error Correction Mechanism (ECM) were the primary estimation methods utilized in the study. During the study year, findings showed that capital flight, foreign reserve, external debt, foreign direct investment, and current account balance all cointegrate with GDP in Nigeria. Additionally, it was discovered that the economy was adversely affected by capital flight.

METHODOLOGY

The study employed a descriptive and time series research design, which is a very important in determining the relationship between time-series variables.

The population of the study consist of all data on capital flight and economic growth from inception to the 2019 period in the Central Bank of Nigeria Statistical Bulletin. For the purpose of the research, a sample size from 1981 to 2019 is selected from the CBN Statistical Bulletin in order to determine the relationship between the variables. Data are quarterly data from 1981 to 2019 from Central Bank of Nigeria Statistical Bulletin (various issues).

The data were selected from the CBN Statistical Bulletin 2019 and the National Bureau of Statistics 2019.

Method of Data Analysis

The Descriptive Statistics, Correlation Matrix and Fully Modified Least Squares regression technique were adopted to analyse the relationship between the variables. Preliminary tests to know the normality and stationarity of the data are conducted through Jarque- Bera, Skewness, Kurtosis tests, and the unit root test. The test for the Jarque-Bera, Skewness and Kurtosis tests is to find out whether that the data are normal. This is because it includes macroeconomic variables that determine the economic growth in Nigeria.

Model Specification

In order to achieve the broad objective of this study, the model of John (2016) was adapted.

In his study of the effect of foreign direct investment on economic growth in Nigeria, the model was specified as:

NEG = CF …………………………………………………….….. i

Where

NEG = Nigeria Economy Growth

CF = Capital Flight

NEG is measured by RGDP and CF is measured by NFI,

Further, equation i is expanded below to capture the objectives of the study;

GDP = f (NFI, EDS, ER, CAB) …………………………….. ii

The econometric form of the functional model is specified as:

GDP = μ₀+ μ₁NFI + εt

Where

GDP = Gross Domestic Product

NFI = Net foreign investments

μ₁ = Shift Parameters ε = error term

t = time series

ANALYSIS OF RESULT

Table 1. Descriptive Statistics

	GDP	NFI
Mean	34690.67	-8918.853
Maximum	71387.83	19793.32
Minimum	13779.26	-99332.80
Std. Dev.	20237.78	23028.95
Skewness	0.673787	-2.231932
Kurtosis	1.880848	8.520117
Jarque-Bera	4.986242	81.89638
Probability	0.082652	0.000000
Observations	39	39

Source: Researcher’s compilation (2021). (GDP = Gross Domestic Product; NFI = Net foreign investments; EDS = External debt servicing; ER = External reserves; CAB = Current account balance)

The mean for GDP stood a 34690.67bn with a standard deviation of 20237.78 and maximum and minimum values of 71387.83bn and 13779.26bn. The standard deviation is large which suggest huge year on year fluctuations in GDP and the variable appears to be positively skewed (0.673). The p-value for the Jacque-bera statistics stood at 0.083 which indicates that the series is normally distributed and the presence outliers is unlikely. The mean for NFI stood at -8918.853bn with a standard deviation of 23028.95. The maximum and minimum values stood at 19793.32 and -99332.8 respectively and negatively skewed (-2.23). The p-value for the Jacque-bera statistics stood at0.065 which indicates that the series is normally distributed and the presence outliers is unlikely.

Table 2: Pearson Correlation

Probability	GDP	NFI
RGDP	1
Prob.	(0.6332)
NFI	-0.10467	1
Prob.	(0.5260)

Source: Researchers compilation (2021).

The Pearson correlation results show the relationship between the dependent and independent variables as can be seen from the results, shows that RGDP is negatively correlated with NFI (r=-0.10467) though not significant at 5% (p=0.5260). The inter-correlations between the explanatory variables are quite low and hence there are no multicollinearity threats which may bias the results.

Test of Hypotheses

H₀₁: There is no significant relationship between net foreign investments and the growth of the Nigerian economy

Table 3: Co-integrating Regression

Variable	Canonical Cointegration regression (CCR)	Dynamic Least Squares (DOLS)	Fully-Modified OLS (FMOLS)
C	5537.481 (3084.7) {0.0821}		5164.172 (3066.93) {0.10955}	5756.477 (3194.69) {0.0810}
NFI	-0.1311 (0.07852) {0.1046}		-0.2413 (0.0940) {0.0194}	-0.12791 (0.0641) {0.0547}
@Trend	1099.194 (288.086) {0.0006}		1102.772 (357.003) {0.0063}	1060.65 (305.398) {0.0015}
R2	-2.815		0.977	0.922
R²Adjusted	-15.394		0.956	0.910

Source: Researchers compilation (2021).

The Cointegrating equation is estimated using recently developed econometric methodologies, namely: fully modified ordinary least squares (FMOLS) of Phillips and Hansen (1990), dynamic ordinary least squares (DOLS) technique of Stock and Watson (1993) and Conical Cointegration Regression (CCR) of Park (1992). These methodologies provide a check for the robustness of results and have the ability to produce reliable estimates in small sample sizes. CCR, DOLS and FMOLS are superior to the OLS for many reasons so let me give you the key ones: (1) OLS estimates are super- consistent, but the t-statistic gotten without stationary 0r I(0) terms are only approximately normal. Even though, OLS is super-consistent, in the presence of “a large finite sample bias” convergence of OLS can be low in finite samples (2) OLS estimates may suffer from serial correlation, heteroskedasticity since the omitted dynamics are captured by the residual so that inference using the normal tables will not be valid -even asymptotically. Therefore, “t” statistics for the estimates OLS estimates are useless (3) DOLS & FMOLS take care endogeneity by adding the leads & lags (DOLS). In addition, white heteroskedastic standard errors are used. FMOLS does the same using a nonparametric approach.

The effect of NFI on RGDP is negative and across all the estimations and significant in DOLs at 5% and FMOLS at 10%. Hence; CCR (-0.1311, p=0.1046), DOLS (-0.2413, p=0.0194) and FMOLS (-0.1279, p=0.0547). This implies that increases in NFI have a significant negative impact on growth. The effect of EDS on RGDP is positive and across all the estimations and significant at 5%; CCR (0.569, p=0.0019), DOLS (0.745, p=0.0016) and FMOLS (0.59122, p=0.00177). This implies increases in external reserves as a positive and significant impact on growth. The finding is in line with theoretical expectations as reserves constitute an economic savings that can be used when necessary to stimulate the economy. Reserves are also an indication of the ability of the control to estimate its debt cover and hence can determine the riskiness of debt growth to economic stability.

CONCLUSION AND RECOMMENDATION

The study examined the impact of capital flight on economic growth in Nigeria and the study proxies capital flight using net foreign investment. The Cointegrating equation is estimated using recently developed econometric methodologies, namely: fully modified ordinary least squares (FMOLS) of Phillips and Hansen (1990), dynamic ordinary least squares (DOLS) technique of Stock and Watson (1993) and Conical Cointegration Regression (CCR) of Park (1992). These methodologies are superior to the OLS for many reasons. The results reveal that the effect of NFI on RGDP is negative and across all the estimations and significant in DOLs at 5% and FMOLS at 10%. Hence; CCR (-0.1311, p=0.1046), DOLS (-0.2413, p=0.0194) and FMOLS (-0.1279, p=0.0547).

This implies that increases in NFI have a significant negative impact on growth. Based on the findings of the study, the recommendation is to keep an eye on net foreign investments, make sure that more investments are brought into Nigeria, and make sure that these channels for foreign investment are not used to transfer capital to other countries.

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November 6, 2022
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Comparing Different Symmetric and Asymmetric GARCH Models in Three Error Distributions Using Nigerian Crude Oil Export Prices

Tags : Asymmetric effect errors distribution modelling oil price time series volatility volatility persistence

Category : Latest Publications

COMPARING DIFFERENT SYMMETRIC AND ASYMMETRIC GARCH MODELS IN THREE ERROR DISTRIBUTIONS USING NIGERIAN CRUDE OIL EXPORT PRICES

Zainul-Abidina Salisu[1]; Hussaini Garba Dikko[2]; Sani Ibrahim Doguwa[3]

ABSTRACT

Volatility modelling has always been an important subject of inquiry and research in Financial Markets (such as crude oil markets). However, the review of relevant literatures showed that Autoregressive Conditional Heteroscedasticity (ARCH) model and its various extensions are being applied for modelling the volatility of Financial Time Series to capture the stylized facts incorporated in these series, but less attention has been given to the contribution of the error distribution assumptions while modelling the volatility. Accordingly, this study examined the monthly series of the Nigerian Crude Oil Price (NCOP) with a scope of January, 1982 to March, 2019 by employing simple GARCH, GARCH-M, EGARCH, TGARCH, GJR-GARCH, and APARCH models each in three main error distributions which are normal error, student’s t error and General Error Distribution (GED). The Log-likelihood function, Akaike Information Criteria (AIC) and Bayesian Information Criteria (BIC) were used to compare the performances of the estimated models. The results indicated the existence of volatility clustering, leptokurtic behavior, leverage effect and high volatility persistence in the Nigerian crude oil price and that the asymmetric EGARCH model in Student’s-t distribution and GED has the best specifications for explaining Nigerian Crude Oil Price conditional volatility than the normal error. It was concluded that the ARCH/GARCH models are suitable for dealing with volatility in oil price market and that, GARCH models with normal errors are not capable to fully capture the leptokurtic in empirical Time Series. Furthermore, the asymmetric effects are indeed present in empirical data and the asymmetric GARCH models perform better than the symmetric GARCH model in explaining conditional volatility. The work recommends that more credence may be given to asymmetric models for modelling oil price volatility, and thus investors to react to bad news than good news.

Keywords: Asymmetric effect, errors distribution, modelling, volatility, oil price, time series, volatility persistence.

INTRODUCTION

Crude oil is one of the greatest vital commodities in the world and despite the crusade for green energy and other sources of power, it is still an exclusive commodity in the international market. Crude oil applications are pervasive in daily life, regardless of being non-renewable, the world consumes crude oil every single minute as it is hard to find an alternative source that can parallel its performances. For the past two decades, oil has been experiencing some ups and downs. In early 1999, there was the Asian Financial Crisis, along with Iraq deciding to increase oil production, which caused oil prices to reach a bottom. But the market adjusted quickly and reached over U.S. $34 by late 2000. The dotcom bubble in 2001 caused another round of economic panic, which caused it to drop until early 2002. Then, the global economy had been regaining momentum which resulted in a few years of bullish state (Lam, 2013). Accordingly, oil prices had been spiking up.

The limiting amount of global oil supply and hostile relationships between the U.S. and a number of oil producing countries caused oil price touched an all-time high of U.S. $147.30 in which the housing bubble in the U.S. started to burst, and an unprecedented credit crisis was followed. The dramatic decline in oil price that followed was difficult to model. Even though the price had, in general, exhibited a steady level of recovery after the financial crisis in 2008, it still posts a great challenge to find a model that performs consistently well, when being confronted with such unpredictable circumstances.

Nevertheless, crude oil price behaves like any other commodity with price swings in times of shortage and surplus. Such price swings have multiplier effect on our daily life ranging from diesel and gasoline to detergent, medicines and household appliances. Because of the multifaceted usefulness of crude oil, there is broad consensus that its price volatility can have significant impact on the financial market and economy. For instance, an increase in oil price induces higher cost of production and changes capacity utilization of firms. Such higher costs of production are usually passed on to consumers through soaring prices of consumer’s goods.

Furthermore, oil prices could lead to the implementation of policies. For example, interest in energy-related policy was revived with the high oil prices in the late 2000s, and the composition of governmental supports across sectors shifted tectonically with the American Recovery and Reinvestment Act, away from fossil fuels and toward unprecedented levels of support for renewable energy. Thus, modelling and forecasting crude oil prices have attracted the interest of business moguls’, energy researchers and policy makers. Therefore, an accurate forecast of oil prices is of great interest to investors, Energy Researchers and policymakers.

However, the review of relevant literatures shows that Autoregressive Conditional Heteroscedasticity model (ARCH model) and its various extensions are being applied for modelling volatility of financial Time Series data in order to captures the stylized facts incorporated in these series such as volatility clustering, persistence, heavy tail distribution, and leverage effects. But less attention has been given to the contribution of the error distribution assumptions while modelling volatility. And according to Deebom and Essi (2017), the wrong use of an appropriate error distribution in volatility model for financial Time Series may cause misspecification in volatility model, leptokurtic and autocorrelation behaviour of such series. Sequel to this, this study tends to model and forecast the volatility of Nigerian monthly crude oil Price series using two symmetric GARCH (GARCH and GARCH-M) models and four different asymmetric GARCH (EGARCH; TGARCH; GJR-GARCH and APARCH) models by considering or assuming three different error distributions which are the Normal Error Distribution, Student’s t Error Distribution and the Generalized Error Distribution. Thus, the aim of this study is to compare the performance of different symmetric and asymmetric GARCH models in three different distributional assumptions namely: normal error distribution; student’s t distribution and the Generalized Error Distribution (GED); and the objectives are:

To determine the volatility of the NCOP by estimating a series of symmetric and asymmetric GARCH models.

To select the best model and appropriate error distribution for explaining conditional volatility of the Nigerian Crude Oil Price based on information criterion, AIC and BIC.

To validate the homoscedasticity assumption of the best model selected using the LM-Test.

LITERATURE REVIEW

Historical examination of Financial Time Series data has revealed that volatility is not constant over time. It has been found that great returns are frequently followed by further large returns and vice versa termed as volatility clustering (Mandelbrot, 1963). The swing in volatility over time is due to the supposed market and unique risks not being constant, leading to risk at different periods (Brooks, 2014). Further on, Asset returns and commodities prices have leptokurtic unconditional distributions (Mandelbrot 1963, Fama 1965), which is related to the time varying volatility and are characterized by volatility clustering (Mandelbrot 1963, Fama 1965). Schwartz (1989) proved that Financial Time Series reveals high and low volatility episodes at any time, entailing that volatility in current time will lead to the probability of volatility many periods in future. Skewness can be associated to the fact that stock prices are liable to cluster; large (small) changes are followed by large (small) changes (Bollerslev 1986).

The first break-through in modelling Time Series that exhibit the above characteristics was championed by Engle (1982) which he termed as Autoregressive Conditional Heteroskedasticity (ARCH) model. Engle (1982) demonstrated that conditional heteroskedasticity can be modelled using an auto-regressive conditional variance of the disturbance term with linear combination of the square disturbance in the recent past second. Meanwhile Engle (1982) modelled the heteroskedasticity by relating the conditional variance of the errors term to the linear combination of the squared errors in the recent past.

However, when using the ARCH model in determining the optimal lag length of variables are very cumbersome (Deebom & Essi, 2017), therefore, often time users encounter problems of over parameterization. Sequel to this and many other lapses and challenges encountered in the ARCH model, Bollerslev (1986) proposed extension to ARCH model which was referred to as Generalized Autoregressive Conditional Heteroskedasticity (GARCH) model. Bollerslev (1986) generalized the ARCH model by modelling the conditional variance to depend on its lagged values as well as squared lagged values of disturbance. This was done with view to achieving parsimony just like the idea behind Autoregressive Moving Average (ARMA) model.

Ever since the work of Engle (1982) and Bollerslev (1986), various variants of GARCH model have been developed to model volatility. Some of the models include IGARCH model originally proposed by Engle and Bollerslev (1986); GARCH in- Mean (GARCH-M) model introduced by Engle et al (1987); the standard deviation GARCH model introduced by Taylor (1986) and Schwert (1989); the EGARCH or Exponential GARCH model proposed by Nelson (1991); Threshold ARCH or TARCH and Threshold GARCH model introduced independently by Zakoïan (1994) and Glostenet al (1993), the Power ARCH model generalised by Ding et al (1993) among others (Tasi’u, et al., 2014).

Most of the studies which applied ARCH/GARCH models on Financial Time Series to measure or model volatility found the existence of non-normality, volatility clusters, negative skewness, leptokurtosis in their respective Time Series from different countries such as the work of Floros (2008) and Emenike (2010) in Nigeria, Su (2010) in China, Angabini and Wasiuzzaman (2011) in Malaysia, Abd el Aal (2011) and Ezzat (2012) in Egypt and Freedi et al.. (2012) in Saudi Arabia which all applied TGARCH, EGARCH, and GJR GARCH models in their studies and their findings revealed that EGARCH and GJR-GARCH are the best models for measuring volatility, detecting clustering effect, leptokurtosis and the leverage effect.

Similarly, Miron and Tudor (2010) compared several statistical models for daily stock return volatility in terms of sample fit and out-of-sample forecast ability. The focus is on U.S. and Romanian daily stock return data corresponding to the 2002-2010 time intervals. The work investigates the presence of leverage effects and estimate different asymmetric GARCH-family models (which are EGARCH, PGARCH and TGARCH) specifying successively a Normal, Student’s t and GED error distributions. They find that GARCH family models with normal errors are not capable to capture fully the leptokurtic in empirical Time Series, while GED and Student’s t error provide a better description for the conditional volatility. Additionally, they outline some stylized fact about volatility that are not captured by conventional ARCH or GARCH models but are consider by the asymmetric models and document their presence in empirical Time Series. Finally they report that volatility estimates given by the EGARCH model exhibit generally lower forecast errors and are therefore more accurate than the estimate given by the other asymmetric GARCH models.

In order to determine volatility modelling of exchange rate between US dollar (USD) and Nigerian Naira (NGN), Tasi’u et al. (2014) investigated the volatility of daily exchange rate of Naira vis-à-vis United State Dollar using GARCH, GJR-GARCH, TGARCH and TS-GARCH models by using data over the period June 2000 to July 2011. The result shows that the GJR-GARCH and TGARCH models show the existence of statistically significant asymmetric effect. The forecasting ability is subsequently assessed using the symmetric loss functions which are the Mean Absolute Error (MAE), Root Mean Absolute Error (RMAE), Mean Absolute Percentage Error (MAPE) and Theil-inequality coefficient. The results show that TGARCH model provide the most accurate forecasts. They conclude that this model (TGARCH model) captured all the necessary stylized facts (common features) of financial data, such as persistent, volatility clustering and asymmetric effects.

Hussaini et al. (2015) evaluated volatility forecasts of the Nigerian Stock Exchange rate obtained through asymmetric models. They make use of monthly data from January, 2000 to January, 2012 to evaluate the parameter of each model and produce volatility estimates. Their result shows that the coefficient of determinant of the presence of volatility clustering is statistically significant in the EGARCH model; this appears to show the presence of volatility clustering. The forecasting ability was subsequently assessed using the symmetric lost functions which are the Mean Absolute Error (MAE), Root Mean Absolute Error (RMAE), Mean Absolute Percentage Error (MAPE) and Theil-inequality coefficient. The results show that GJR-GARCH model provides best estimates for persistence, volatility clustering and leverage effects are absent or minimal, GARCH model provides the most accurate forecast of future volatility.

In the same vein, the volatility of crude oil prices has been of growing area of research. Accordingly, the studies of oil price volatility are covering a number of different areas and issues and examine the characteristics of these prices in various respects. Many empirical studies showed evidence that Time Series of crude oil prices, likewise other financial Time Series, are characterized by the common features of financial data called stylized facts such as heavy tail distribution, volatility clustering, asymmetry and leverage effects.

Narayem and Narayan (2007) use the Exponential Generalized Conditional Heteroscedasticity (EGARCH) model with a daily data for the period 1991-2006 with the intention of checking for evidence of asymmetry and persistence of shocks. In their work, volatility is characterized in various sub-samples to judge the robustness of their results. Across the various subsamples they show an inconsistent evidence of asymmetry and persistence of shocks and also across full sample period, evidence suggests that shocks have permanent effects and asymmetric effects on volatility. Thus Narayan and Narayan (2007) findings imply that behaviour of oil prices tends to change over short periods of time.

Olowe (2009) investigated weekly oil price volatility in Nigeria using EGARCH (1, 1) within January 3, 1997 – March 6, 2009. The result shows that the oil price return series has high persistence of volatility, volatility clustering and asymmetric characteristics.

In like manner, Tatyana (2010) studied the dynamics of oil prices (Brent and WTI crude oil markets) and their volatilities by Linking four GARCH related models namely; GARCH (1,1), GJR – GARCH (1,1), EGARCH (1,1) and APARACH (1,1). The findings of this study showed that oil shocks have permanent impact and there exist asymmetric consequence on the volatility of the markets under consideration.

Alhassan and Kilishi (2016) provide analytical insight on modelling macroeconomic and oil price volatility in Nigeria. Mainly, they employed GARCH model and its variants (GARCH-M, EGARCH and TGARCH) with daily, monthly and quarterly data. The findings reveal that: all the macroeconomic variables considered (real gross domestic product, interest rate, exchange rate and oil price) are highly volatile; the asymmetric models (TGARCH and EGARCH) outperform the symmetric models (GARCH (1 1) and GARCH – M), and that, the asymmetric effects are important in modelling oil market in Nigeria. They also conclude that crude oil price is a major source of macroeconomic volatility in Nigeria.

The study of Deebom and Essi (2017) was targeted at modelling price volatility and the risk-return related to crude oil export in Nigerian crude oil market using the first order asymmetric and symmetric univariate Generalized Autoregressive Conditional heteroscedasticity (GARCH) family models. Three objectives with three research questions and two hypotheses were raised for the study. The results from the statistical analysis reveal that the markets were optimistic of their investment and other trade related activities. Sequel to that, there were high probabilities of gains than losses. Although, the variables use in the markets were extremely volatiles and shows evidence there exists positive risk first-rated meaning that investments or investors deserved rewards for holding risky assets. However, the selected models were subjected to several diagnostic test such as ARCH effect test, test for serial correlation and QQ-plot in order to validate their fitness which was confirmed to be appropriate. For investors or marketers in these markets, they were advice to be mindful in trading in a highly volatile period especially when there is evidence of high standard deviation in the descriptive statistic of the return series and in modelling volatility of price return of certain micro/ macro-economic variable the leverage effect of such variable should be properly estimated using asymmetric GARCH model.

Aigheyisi (2018) investigated the effect of oil price volatility on the business cycle (measured as fluctuations in real GDP) in Nigeria, while controlling for effects of other variables such as inflation, exchange rate, money supply, trade openness and foreign direct investment. Volatility in real GDP and oil price is generated through the EGARCH process. The paper recommends channelling of efforts by the government towards diversifying the productive base and exports of the country as measure to reduce volatility in the real GDP.

However, the review of relevant literatures showed that Autoregressive Conditional Heteroscedasticity (ARCH) model and its various extensions are being applied for modelling volatility of financial Time Series data in order to captures the stylized facts incorporated in these series such as volatility clustering, persistence, heavy tail, and leverage effects. But less attention has been given to the contribution of the error distribution assumptions while modelling volatility. According to Deebom and Essi (2017), the wrong use of an appropriate error distribution in volatility modelling for financial Time Series may cause misspecification in volatility model, leptokurtic and autocorrelation behaviour of such series. Sequel to this, this study tends to examine the volatility of Nigerian monthly crude oil Price series using two symmetric GARCH (GARCH and GARCH-M) models and four different asymmetric GARCH (EGARCH; TGARCH; GJR-GARCH and APARCH) models by considering or assuming three different error distributions which are the Normal Error Distribution, Student’s t Error Distribution and the Generalized Error Distribution. Thus, the study investigates best model for the Nigerian crude oil price with best error distribution.

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The New Phenomenon of Urban Crime in the Northeast: A Focus on the Emergence of Arms Groups and the Spread of Firearms

Tags : Armed Groups Firearms Northeast Proliferation Urban Crime

Category : Latest Publications

THE NEW PHENOMENON OF URBAN CRIME IN THE NORTHEAST: A FOCUS ON THE EMERGENCE OF ARMS GROUPS AND THE SPREAD OF FIREARMS

Idriss Yusuf and Abdulkarim Umar

Department of General Studies

The Federal Polytechnic Damaturu

Yobe State, Nigeria

Email address for correspondence: abdulkarimumar12@gmail.com

Phone: 08065302832

Abstract

Half of the world’s population now lives in metropolitan regions. This development has undesirable side effects, which are part of this study’s focus. Urbanization, population expansion, the introduction of new crimes, and the proliferation of small guns have led to global communities’ concern. The study focuses on the metropolitan regions of Borno and Yobe states in northeastern Nigeria. These locations have been hit by the Boko Haram conflict, which has spread small arms. Such a profusion of weaponry may have intensified urban crime. The study aims to understand the causes of violent crimes in northeastern Nigerian cities; the contributions of firearm proliferation to the emergence and expansion of urban crime; the implications of engaging civilians in supplementing security efforts in relation to small firearm proliferation and urban crime growth; and the necessary measures for crime control. Based on these objectives, researchers conducted survey research to answer research questions. Urban areas of Borno State (Jere, Konduga, Damboa) and Yobe State (Damaturu, Potiskum, and Geidam) where non-state armed groups increased urban crime were sampled. Some respondents were interviewed, while others were given questionnaires. We also interviewed important informants to learn more. SPSS was used to analyze the data.

Keywords: Armed Groups, Firearms, Northeast, Proliferation, Urban Crime.

1 Introduction

For the first time in human history, more than half of the world’s population already resides in urban areas, and UNHABITAT (2007) projects that in the next 25 years, all future population growth will be absorbed in urban areas. This change presented metropolitan regions with a number of difficulties, including armed robbery, murder, and large-scale physical assault. The spread of small guns and light weapons, which fuel civil conflicts, organized criminal violence, insurgency, and terrorist activities while creating significant barriers to long-term security and development, is deemed to be the world’s most pressing security concern (Malam, 2014). As a result, laws were required to limit the frequency of violent crimes in metropolitan areas. Due to the actions of non-state armed groups known as Boko Haram and ISWAP, the northeastern region of Nigeria is a region that is heavily saturated in armed conflict. Their actions have also contributed to the widespread possession of firearms, which is often harmful because these weapons end up in the hands of those who have little regard for human life. It is a well-known fact that with such weapons, violent crime would increase in our urban centers.

A National Task Force (NATFORCE) was created in 2019 to battle the illegal importation and smuggling of goods, small arms, ammunition, and light weapons due to worries over the widespread use of illicit weaponry across the nation and the northeastern region of Nigeria in particular. The organization agreed that the spread of small arms and light weapons is one of the biggest threats to security in Nigeria, Africa, and the world as a whole (Daily Trust, 2021).

The Nigerian Customs Service (NCS), in 2017, recorded the seizure of shipments of 2,761 pump action rifles and said all four shipments intercepted from Turkey were false declarations on the bills of landing, showing a case of smuggling. The government has been significantly seizing arms, but it has been on the rise in the last five years (Daily Trust, 2021). The majority of these weapons made their way into metropolitan areas, where they are employed by the criminal elements of society to conduct various types of crimes. Since most people from economically successful rural areas move to cities where security is at a decent level, it is necessary to investigate strategies for preventing crime in urban areas.

2 Statement of the Problem

The urban population has grown significantly over the past 50 years, and this expansion has also brought issues like armed robberies, murder, kidnappings, and other types of violent assaults against the populace. Therefore, it urges policy adjustments that will concentrate on the issues in order to stop further deterioration. Although there has always been crime in cities, the dynamics that have emerged in recent years—especially with the rise of non-state armed organizations, notably in the study area as a result of the abundance of firearms—are cause for concern. The issues of controlling the population have increased as people on the run have been moving to urban centers to escape attacks from non-state armed organizations, which is causing the urban areas to generally explode. Numerous people who migrated to metropolitan regions did so from various socio-cultural and economic backgrounds. They are completely dependent on donations from charitable groups, family members, and the government because they have no other means of support. Some people are compelled to join gangs that commit crimes in the cities as a result of their terrible condition.

The Study’s Objectives

The main goal of the study is to find ways to cut down on crime in Nigeria’s northeastern cities. It also has the following more specific goals:

To know the reasons behind violent crime in northeastern Nigeria’s metropolitan areas

To investigate the effects of the widespread availability of firearms on the emergence and growth of urban crime.

Consider the effects of including people in supplemental security operations in light of the spread of small guns and the rise in urban crime.

Examine the steps that must be taken to control the dynamics of urban crime as they are now in the northeastern urban centers.

Study Questions

What are the reasons behind violent crimes in northeastern Nigeria’s metropolitan areas?

What are the effects of the widespread use of firearms on the emergence and growth of urban crime?

What are the effects of including people in supplemental security operations in light of the spread of small guns and the rise of urban crime?

What steps are required to control the trends in urban crime that are now being seen in the Northeast’s urban centers?

Research’s Importance

The research is important and timely since it is anticipated to offer solutions to the present issues plaguing the region’s urban areas. The federal government and the governments of the region’s states should take this into account when developing and implementing policies.

Review of Literature

Violent Crime’s Causes

Moser and Mcllwaine (2004) highlighted that firearms and drugs have introduced another layer of danger to violence in metropolitan areas. There are several factors that drive people to commit violent crimes. Though not all metropolitan areas experience violence in the same way, it can vary greatly in intensity between different countries and urban centers. According to Moser and Moser (2003), it is crucial to distinguish between structural causations (connected to unequal power relations) and trigger causations. (Situational circumstances that can exacerbate the likelihood of violence occurring). Variations in violence levels within cities are correlated with neighborhood wealth, gender, and age. According to Gaviria et al. (1999), severe violence is typically concentrated in lower-income areas, notably in the marginal periphery, while violent crime in more affluent areas is typically property-related (Moser, 2004). But as vehicle robberies rise, so does the danger of getting killed in the process, which has made the richer community feel more uneasy (Moser, 2004). The majority of violent acts are most likely to be committed by or against young men (Moser, 2004).

The Spread of Small Arms

Assault rifles, pistols, sub-machine guns, and other light weapons, such as light machine guns and assault rifles, are included in the category of tiny firearms that refer to weapons made for combat (Department for International Development, 2002). According to Rana (1994), “small firearms” refer to any method of lethality other than the straightforward application of physical force. The United Nations panel of government experts on small arms came to the conclusion that small arms refers to weapons designed for personal use. It was also revealed that these small arms include revolvers, self-loading pistols, rifles and carbines, submachine guns, assault rifles, and light machine guns, whereas light weapons include heavy machine guns, hand-held under-barrel, mounted grenade launchers, portable anti-aircraft guns, portable anti-tank guns, and a host of other weapons. Thus, the government experts’ panel stated in its 1997 report that “small arms” includes things like knives, sticks, stones, and other conventional weapons.

The Guardian (2020) stated that while the military forces and law enforcement are responsible for 586,600 weapons, there are an estimated 6,145,000 small arms in use in Nigeria that are in the hands of civilian non-state groups. Compared to other regions, north-eastern Nigeria experiences much less violence and small arms proliferation. The spread of weapons and violent crimes in the area are associated with non-state entities attempting to establish a Caliphate or sphere of influence. Within this axis, the terrorist organization Boko Haram operates.

When they reported that armed violence cost Africa $18 billion a year and roughly $300 billion between 1990 and 2005, the International Action Network on Small Arms, Safer World, and Oxfam International put it in context. During this time, Algeria, Angola, Burundi, the Central African Republic, Chad, the Democratic Republic of the Congo (DRC), the Republic of the Congo, Cote d’Ivoire, Djibouti, Eritrea, Ethiopia, Ghana, Guinea, Guinea-Bissau, Liberia, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, South Africa, Sudan, and Uganda all went to war.

Therefore, small arms proliferation implies the availability of unregulated small arms (Muggah, 2001). It has also been called the unchecked proliferation of small guns. This only means that the proliferation of arms is measured by the rate at which small arms increase in a region (Alimba, 2008). Small arms, especially conventional ones, are preferred by criminals in urban areas because they are relatively more affordable, dependable, and powerful than traditional weapons, as well as convenient to carry and move around with, easy to conceal, and exceedingly lethal (Alimba, 2004). According to Onuaha (2011), Nigeria’s crude politics played a major role in the spread of SALWs in that country. Politicians in Nigeria define and view politics as a war-like situation, especially in electoral politics. Politicians in Nigeria are driven to extremes in their quest for elective seats because the stakes are so high. Because of this, many of them seek out and maintain political power by enlisting “specialists of violence” like cultists, gangs, and thugs (Onuaha, 2012:53).

Violent Crime Prevention

It is commonly acknowledged that there are no quick fixes or magic formulas for reducing violence (Moser, 2004). Different strategies have varying degrees of success and are better suited to certain environments than others. However, there are certain recurring themes essential to any strategy to lessen violence: Moser (2004) talks about CPTED (Crime Prevention through Environmental Design)/urban renewal, citizen/public/community security, criminal justice, public health, conflict transformation/human rights, social capital, and policy approach.

Methodology

This research used both primary and secondary data sources. This is because, apart from the data directly collected on the field, the researchers used data from other works of others and data collected for different purposes by other writers, government agencies, or organizations. The methods employed for primary data collection in this research involved a questionnaire, an interview schedule, and a key informant interview, simply reflecting methodological triangulations.

As one of the instruments of research, questionnaires were distributed to the selected sample in the urban areas of Borno State (Jere, Konduga, and Damboa) and Yobe State (Damaturu, Potiskum, and Geidam). This is in order to acquire answers to the questions raised in the questionnaire. The questionnaire is comprised of both open and close-ended questions, which gives the respondents the chance to select from options provided and also allows them to give their own inputs regarding the situation.

The respondents here were selected through simple random sampling. Although a sample frame does not exist, the houses were numbered in order to give every household a chance of being selected in the areas chosen in the urban centres, which comprised the slum areas/ghettos and the elite residential areas. A total of 500 respondents were chosen from urban areas in Borno State (Jere, Konduga, and Damboa) and Yobe State (Damaturu, Potiskum, and Geidam). The projected population of the selected areas in total is 1,607.195.00.

The researchers adopted Slovin’s formula for research sample selection, which is stated as follows:

The number of samples is denoted by N.

N = Population (1,607,195.00).

Error = 2%

Table 1: Calculation of sample size

N	E	Ne	1+Ne	(1+Ne)2	N/(1+Ne)2	n	20%
1607195.00	0.02	27577.900	27578.900	760595725.210	0.0018129	2499.819	500

Based on this formula, the researchers arrived at an initial total sample size of 2,499.819 from the total population in the six locations, and 20% of it was used, which represents only the urban towns and not the entire local government areas for the research sample, which is 500 respondents. This is because the population represents the entire local government areas. Data collected in the process of this research was analyzed using descriptive statistics by employing the use of tabulations, frequencies, and percentages by employing the use of SPSS.

Results Presentation and Analysis

Out of the total number of the sample size of 500, only 480 questionnaires were filled and returned. The data presentation and analysis were therefore done based on the returned questionnaires of 480 by the respondents, taking into account the objectives of the research.

Table 2: Causes of Violent Crimes in Urban Areas

Understanding the causes of violent crimes in the urban areas of the northeastern part of Nigeria Question	Responses	Frequency	Percentage	Valid Percentage	Cumulative Percentage
Do you think violent crimes are increasing in the urban areas of the northeast?	Yes	460	96	96	96
No	20	4	4	100
Is poverty the cause of urban crime in the urban areas of the north-east?	Yes	470	98	98	98
No	10	2	2	100
Is the rise in urban crimes a result of the problem of insurgency in the area?	Yes	478.0	99.6	99.6	99.6
No	2	0.4	0.4	100

Based on the responses of the respondents, it can be seen in the table above that the number of violent crimes that are being committed in the urban areas of northeast Nigeria is growing. The majority, or 96%, hold that this viewpoint is correct, whilst a negligible percentage, 4%, do not. The table also reveals that poverty is a source of urban crime in the urban regions of northeastern Nigeria. This information can be found by looking at the table. The remaining 2% of respondents, which is practically insignificant, did not share this viewpoint, but the vast majority of them (98%) did. The very same data also demonstrated that the insurgency is to blame for the spike in the number of urban crimes that have occurred in the northeast. Additionally, 99.6% of those who responded believed that this was justified, but there were still 0.4% who did not agree with them.

Table 3: The Effects of Firearms Proliferation

Examining the effects of the proliferation of firearms on the emergence and expansion of urban crime. Question	Responses	Frequency	Percentage	Valid Percentage	Cumulative Percentage
Are firearms on the increase in the area?	Yes	466	97	97	97
No	14	3	3	100
Are these firearms locally produced or imported?	Yes	60	12.5	13	12.5
No	420	87.5	88	100
Is the availability of firearms the major cause of urban crime in the area?	Yes	80	17	17	17
No	400	83	83	100
Are these arms being used in the perpetuation of urban crime in the area?	Yes	450	94	94	94
No	30	6	6	100

The spread of firearms in northeast Nigeria is analyzed in Table 3, which can be found here. As seen in the table, the majority of respondents (97%) believe that there has been an increase in the number of firearms in the area, while only 3% disagree. On the other hand, the same table showed that 12.5% of respondents think that the firearms were not created locally, which indicates that 87.5% of respondents are of the opinion that the firearms were imported. In the same vein as the previous point, the table demonstrated that the availability of firearms in the area is not the primary factor contributing to urban crime. This was accounted for by 83% of the respondents, of which 17% were of the opinion that the most significant reason for urban crimes in the area was the availability of firearms. Nevertheless, the table revealed that 94 percent of the respondents were of the opinion that guns were being used in the continuation of urban crimes in the area. This is despite the fact that the availability of firearms was not the primary cause of urban crime in the area.

Table 4: Implications of Engaging Civilians in Security.

Examining the implications of engaging civilians in supplementing security efforts in relation to the proliferation of small firearms and the growth of urban crime Question	Responses	Frequency	Percentage	Valid Percentage	Cumulative Percentage
Do you support the arming of civilians to supplement the efforts of the government’s security?	Yes	459	96	96	96
No	21	4	4	100
Have the armed civilians helped in reducing the magnitude of urban crime in the area?	Yes	100	21	21	21
No	380	79	79	100
Do you think that the armed civilians are playing according to the rules of the game?	Yes	120	25	25	25
No	360	75	75	100
Do you think that armed civilians should be recruited into the government’s security agencies?	Yes	111	23	23	23
NO	369	77	77	100

An investigation into the implications of including civilians in the augmentation of security measures in light of the widespread availability of handguns and the rise in the rate of violent crime in metropolitan areas. As the table demonstrates, the majority of respondents (96%) hold the opinion that they are in favor of arming civilians in order to augment the efforts of the government security forces. Only 4% of respondents hold the opinion that they are not in favor of arming civilians. However, the same table revealed that the respondents considered that the armed citizens did not help in lessening the scale of urban crime in the area. This attested that 79% of the respondents believed this to be the case. In a similar manner, the table exposed the fact that the armed people were not playing the game in accordance with the established guidelines. 75% of the respondents were of the opinion that this was the case, whereas 17% were of the opinion that the armed citizens were playing by the rules of the game. According to the table, 77 percent of those who participated in the survey hold the opinion that armed civilians should not be recruited into government security agencies. This opinion is based on the strong belief that armed civilians do not play the game according to the rules.

Table 5: Measures Needed to Control Urban Crime

Exploring the necessary measures needed in the control of the current dynamics of urban crime in the urban centers of the northeast. Question	Responses	Frequency	Percentage	Valid Percentage	Cumulative Percentage
Do you think recruiting more security is necessary to check the rise in urban crimes in the northeast?	YES	475	99	99	99
NO	5	1	1	100
Are you sure the security agencies are taking the appropriate measures to control the situation?	Yes	469	98	98	98
No	11	2	2	100
Do you think the security agencies need improvement in their condition of service?	Yes	473	99	99	99
No	7	1	1	100
Do you think the allowances of the armed civilians are adequate in relation to their efforts?	Yes	79	16	16	16
No	401	84	84	100

An investigation into the steps that must be taken in order to control the current dynamics of urban crime in the northeastern region’s metropolitan centers. As shown in the table, 99% of respondents believe that increasing the number of security personnel should be a priority in preventing the spread of urban crime in the northeast. On the other hand, the same table revealed that the respondents believed that they were sure that the security services were taking necessary measures to regulate the situation, which was affirmed by 98% of the respondents. This was a significant finding. In the same line as the previous point, the table demonstrated that the respondents believed that the quality of service provided by the security agencies had to be improved. The respondents agreed with this assessment to a 99% level. The table reveals that 84% of respondents believe that the allowances given to armed civilians are grossly inadequate in comparison to the efforts that they put in. This strong belief comes from the fact that respondents strongly believe that the conditions of service for armed civilians need to be improved.

Table 6: Chi-Square Test


	Value	Df	Asymptotic Significance (2-sided)
Pearson Chi-Square	210.000^a	196	.234
Likelihood Ratio	81.242	196	1.000
Linear-by-Linear Association	14.000	1	.000
N of Valid Cases	15
a. 225 cells (100.0%) have an expected count of less than 5. The minimum expected count is 0.07.

Ho: Urban crimes in north-eastern Nigeria are not caused by the proliferation of small firearms and the activities of non-state armed groups.

Ha: Urban crimes in north-eastern Nigeria are caused by the proliferation of small firearms and the activities of non-state armed groups.

When the data was entered into SPSS, the χ² test revealed that the Pearson chi-square value was 0.234, which is greater than the alpha value of 0.05. Based on the findings, the null hypothesis is accepted, implying that urban crimes in north-eastern Nigeria are not caused by the proliferation of small firearms and the activities of non-state armed groups.

Conclusion

This study appraised the measures needed to prevent violent crimes in urban areas of the northeast region amidst the proliferation of small firearms, which can easily influence the situation. There is no doubt that such a situation is further aggravated by the activities of non-state actors and wide unsecured international borders. The diffusion of such small firearms into larger society paves the way for high levels of armed violence. Nigeria has in the past decades witnessed increased violence and small arms circulation. Today, its proliferation is attributed to the existence of electoral injustice, ethnic bigotry, and religious intolerance coupled with high levels of poverty and youth unemployment in the country. Although Nigeria’s problem with small firearms is not new, its increasing availability in the last two decades has propelled a wave of insurgency, ethno-religious conflicts, banditry, kidnapping, terrorism, human trafficking, drugs, armed robbery, herders’ and farmers’ crises, and other violent crimes. This has significantly contributed to the breakdown of law and order.

Recommendations

According to the research, urban crime is on the rise, and it is therefore critical to make concerted efforts to address the problem.

Poverty has to be addressed by equipping the youth with technical skills through establishing skills acquisition centers to train the youth and provide them with resources for takeoff.

Even though arms are considered the major reason for the growth in urban crime, efforts should be made to control the spread of such arms.

Although the majority of the respondents were of the view that the civilian vigilantes should not be recruited into the government security agencies, the government should provide a sustainable means of giving them reasonable support in order to encourage them to retain the tempo.

More training is required by the security agencies in handling urban crime since its scenario differs from the fight against terrorism and insurgency.

References

Alimba, C. N. (2008). Lecturer–Students’ perception of causes, effects and management patterns of students’ unrest in tertiary institutions. African Journal of Educational Management, 11(1), 170-189.

Daily Trust, 7 February 2021, Abuja

Gaviria, A., & Pagés-Serra, C. (1999). Patrones de victimizaciónpor el hampaen América Latina (No. 4187). Research Department, Inter-American Development Bank, Research Department

Guardian, 7 May, 2020.

Malam B., (2014). Proliferation of small arms and light weapons and its implications for West African regional security, 4(8), International Journal of Humanities and Social Science.

Maurice C., Luce L., Franz V., and Claude V. (2001).Urban safety and good governance: The role of the police. Habitat Publishers, Canada.

Moser, C. O. (2004). Urban violence and insecurity: an introductory roadmap.

Moser, C., & Moser, A. (2005). Gender mainstreaming since Beijing: a review of success and limitations in international organizations Gender & Development, 13(2), 11-22.

Muggah, H. C. R. (2001). Globalisation and Insecurity. The Direct and Indirect Effects of Small Arms Availability. The IDS bulletin, 32(2), pp. 70-78.

Neanidis, K. C., Rana, M. P., & Blackburn, K. (2017). An empirical analysis of organized crime, corruption, and economic growth Annals of Finance, 13(3), 273-298.

UN Habitat (United Nations Human Settlement Programme) 2007). (2011) 25 Journal of Social Sciences – Sri Lanka, Lanka 25.

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Investigating the Analgesic Property of Petroleum Ether Extract of Piptadeniastrum Africanum (Mimosacae) using Formalin-Induced Pain Model

Tags : analgesic activity Formalin-induced pain model phytochemical screening Piptadeniastrum africanum

Category : Latest Publications

INVESTIGATING THE ANALGESIC PROPERTY OF PETROLEUM ETHER EXTRACT OF PIPTADENIASTRUM AFRICANUM (MIMOSACAE) USING FORMALIN-INDUCED PAIN MODEL

UKAEGBU VICTOR CHISOM, OYEWOLE ESTHER OLUWASEYI

Co-Authors: PHARM. IVAN NYARKO-DANQUAH, JEREMIAH OLUWASESAN ADEOYE

Department of Pharmaceutical Sciences, Central University Ghana, June 2016

ABSTRACT

Pain is a very common symptom and it indicates that something is wrong in the body and may give a clue to the nature of disease. Thus, this study was done to determine if there is analgesic activity present in the bark extract of Piptadeniastrum africanum and future usefulness in the management of pain.

The extract was subjected to preliminary phytochemical screening. The extract showed the presence of flavonoids, sterols, and glycosides. The analgesic activity of the bark extract was analyzed using formalin-induced pain model in which the subjects used were adult male mice with an average weight of 24grams. Different doses of 250mg/kg, 500mg/kg and 1g/kg respectively of the extract were administered to the mice with positive control as aspirin 100mg/kg, negative control of emulsion was used as vehicle (since petroleum ether is not soluble in water).

The results from the graph of duration of paw licks against the different dose groups showed that the duration of paw licks reduced drastically when aspirin was administered to the mice when compared to the other dose groups and the duration of paw licks was highest with the vehicle. Therefore, it may be concluded that the bark extract has little analgesic activity. However, in-depth analysis on the P-values showed that most of the values were not significant (values have to be significant to indicate the presence of analgesia). From this, we can deduce that the petroleum ether bark extract of Piptadeniastrum africanum has little or no analgesic activity. Hence, further comprehensive studies are needed for more adequate confirmation of the deduction.

KEY WORDS: Piptadeniastrum africanum, phytochemical screening, Formalin-induced pain model, analgesic activity.

INTRODUCTION

Pain is not easily or satisfactorily defined and therefore is often interpreted as a suffering that results from the perception of painful stimuli. It’s a common symptom and it indicates that something is wrong in the body and may give a clue to the nature of disease. Hence, “pain is a specific sensation with its own peripheral and central mechanisms independent of other five senses.” Pain itself is not a disease; it is by far the most common medical complaint. It is usually perceived as an indication of ill health and most diseases have a component of pain. The control of pain is one of the most important uses to which drugs are put. Pain can be defined as the effect produced in consciousness by the arrival of nerve impulses generated by noxious stimuli in the brain. Drugs, which alter the pain sensitivity or remove pain, are called as painkiller or analgesics (Debasis Mishra, 2011). Pain is the most common symptom prompting patients to seek medical attention and is reported by more than 80% of individuals who visit their primary care provider. Despite the frequency of pain symptoms, individuals often do not obtain satisfactory relief of pain. This has led to recent initiatives in health care to make pain the fifth vital sign, thus making pain assessment equally important as obtaining a patient’s temperature, pulse, blood pressure, and respiratory rate. (Marie chisholm-burns, Barbara wells, & Schwinghammer, 2008).

According to IASP (International Association for the study of Pain), Pain is “an unpleasant sensory and emotional experience associated with actual or potential tissue damage, or described in terms of such damage (Merskey, Albe- Ferssard, Bonica, Carmon, Dubner, & Kerr, 1979).” Pain is universal, complex and very subjective (subjective in the sense that; the patient is the only person that can describe the intensity of the pain). Pain threshold is not uniform, people can respond to pain in different ways for the same condition. Pain is used interchangeably with inflammation although they have similar drugs that can be used to treat both pain and inflammation like the conventional Non-steroidal anti- inflammatory drugs [NSAIDS] which can be used for management of both pain and inflammation but they are not the same while pain is a subjective experience that varies from person to person it generally is an unpleasant sensory and emotional experience associated with actual or potential tissue damage such as inflammation, or described in terms of such damage as stated above. Inflammation is a localized physical condition in which part of the body becomes reddened, swollen, hot, and often painful, especially as a reaction to injury or infection.

This research is designed to obtain petroleum ether extract, confirm the presence of certain phytochemical constituents in the extract and investigate the analgesic activity of Piptadeniastrum africanum (Mimosacae) on adult male mice using the formalin-induced pain model.

MATERIALS AND METHODS

Plant collection: – Fresh bark of Piptadeniastrum africanum (mimosacae) was collected from Kumasi, Ghana, and also authenticated in Kumasi by appropriate standard botanist to ensure that the species of the bark was very accurate

Plant extraction: – the bark of Piptadeniastrum africanum was sun dried for 4 weeks and milled using a milling machine. A soxhlet extractor was used in the extraction process. 200grams of the powdered dried bark of Piptadeniastrum africanum was weighed using a weighing scale five times (making 1kilogram of powdered dried bark was weighed in total). The extraction process was done five consecutive times because the soxhlet extractor could only take 200grams of the powdered mass at a goal. For each 200grams of the powdered dried bark of Piptadeniastrum africanum, 2 litres of petroleum ether were added.

The extraction took two days after which a uniform extract was obtained. The extract was then collected into a round bottom flask and then concentrated using the rotary evaporator. A lemon green concentrate was obtained after the rotary evaporation process. And this was poured into an evaporating dish and was air dried for 2 days.

PRELIMINARY PHYTOCHEMICAL TESTS

Phytochemical analysis was performed on the petroleum ether extract of Piptadeniastrum africanum to identify the bioactive chemical constituents present in the crude extract of the plant material. The chemical constituents were determined as stated in Trease (2002), Harborne (1993) and Sofowara (1993). The chemical constituents analyzed were: flavonoid, alkaloids, tannins, coumarins, triterpenoids, steroids, glycoside (saponin, anthracene, cardiac, cyanogenetic glycosides).

PHARMACOLOGICAL ANALYSIS

Experimental Animals: – The ICR mice were obtained from CSRPM (Center for Scientific Research into Plant Medicine) in Mampong in Eastern Region, Ghana and they were male ICR mice and were kept inside cages containing wood shavings in the pharmacology lab, randomly selected and grouped into the positive control study group, negative control study group, the plant extract of different concentration study group (250mg/kg, 500mg/kg and 1000mg/kg). Aspirin was used as a positive control or the reference drug and water was used as a negative control drug, they were fed and given water daily.

Drugs and chemicals: –

Acetylsalicylic acid (Aspirin) Tablets BP 300mg (GML, ACCRA, GHANA, and BATCH NUMBER- B101/M05),

Formalin injection,

Petroleum ether,

Petroleum ether extract Piptadeniastrum africanum.

Reagent preparation

Formalin injection: – 2.5 ml of formalin was measured into a 100ml volumetric flask and topped up to the 100ml volumetric flask using NaCl (2.5% formalin in NaCl).

Emulsion for the petroleum ether extract: – in the preparation of the emulsion, the dry gum method was used. Emulsion was prepared for 4 different doses of the extract. 30grams of acacia gum was weighed using a weighing balance into a clean porcelain mortar and triturated clock wisely into fine particles. 50ml of arachis oil (frytol) was measured using a measuring cylinder and added to the fine particles with an immediate continuing stirring of the mixture in a clockwise direction for 15 minutes, a little amount of water was added to the mixture and triturated. The already made emulsion was transferred into an amber coloured bottle to prevent photo degradation of the emulsion (cracking). And this procedure was repeated four times for the four different doses. Reason behind the preparation of the emulsion is that petroleum ether plant extract is not soluble in water, so an emulsion was prepared to enhance the solubility of the petroleum ether plant extract.

2.6 Method for Pharmacological analysis

The animals were kept in three cages 15 animals per cage at room temperature in which they had access to food and water. Prior to testing, the animals were weighed using a weighing balance and placed in an observation chamber where there was no access to food and water. 3 animals were observed for each dose, for each dose (250mg/kg, 500mg/kg, 1g/kg, positive control, negative control), 0.2ml of each dose were administered to the animals (mice) orally. After 30 minutes, 0.05ml of formalin injection was injected under the skin of the dorsal surface of the right hind paw using a micro syringe. The amount of time the animal spent on licking the injected paw was recorded.

To determine the course of the responses, experimental naïve animals were observed for 30 minutes after the administration of the formalin injection. Where there was the early phase of observation (15 minutes) and the late phase of observation (15 minutes). The animals for the negative control test were only administered with the emulsion without the extract being present in it and 30 minutes later, they were injected with formalin injection like the other test animals. The animals for the positive control test were administered with aspirin and 30 minutes later, they were injected with formalin injection and the early phase and late phase were also observed. In this experiment only one concentration of formalin injection was used (2.5% formalin in 100ml NaCl).

Pain intensity was rated using one single objective response: licking the injected paw, either the dorsal surface of the paw, the toes or the leg. The duration at which the animal spent licking was recorded.15 experimental animals were used with 3 assigned for each dose group

STATISTICAL ANALYSIS OF RESULTS

3.0 RESULTS

3.1 RESULTS FROM EXTRACTION PROCEDURE

3.1.1 WEIGHT RECORDED

Mass of milled plant bark

Mass of powered plant + beaker = 1584.1g,

Mass of beaker only = 584.15g,

Mass of sample only = 100g,

Mass of petroleum ether extract

Mass of petroleum ether extract + evaporating dish = 171.99g,

Mass of empty evaporating dish = 149.96g,

Mass of petroleum ether extract

= (mass of extract + evaporating dish mass of empty evaporating dish) =22.03g.

3.1.2 ANALYSIS OF YIELD OF EXTRACT

To calculate for the percentage yield

Mass of total milled sample taken = 1000g

Mass of concentrated petroleum ether extract = 22.03g

Percentage yield = Mass of concentrated petroleum ether extract,

Total sample taken

= 22.03g x 100

1000g =2.203%

3.2 PHYTOCHEMICAL SCREENING

3.2.1 PRELIMINARY PHYTOCHEMICAL TEST

Phytochemical test was carried out on both the petroleum ether extract and the plant bark itself. The tests carried out on the petroleum ether extract showed the presence of phytochemicals including; Steroids, glycosides (cyanogentic glycosides), flavonoids. However, the same test carried out on the bark showed the presence of alkaloids, tannins, flavonids, steroids, glycosides (saponins and cyanogenetic glycosides).

Table 1: Preliminary photochemical tests on plant extract

TEST	OBSERVATION	INFERENCE
Mayer’s test for alkaloids a) Wagner’s reagent + small portion of extract	A white buff precipitate	Alkaloids may be present
Dragendorff’s test for Alkaloids b) 2ml of dragendorff’s reagent + 1ml of extract	A purple colour change	Alkaloids may be present
General Test for Glycosides f) 25ml of dil. H₂SO₄ to 5ml extract and boil for 15mins	Formation of a brick-red colour	Glycosides may be present
Froth test for saponins e) 0.5g of extract + 1ml of alcohol diluted with 20ml distilled water. Shake well for 2min.	No froth formed on standing	Saponins may be absent
Test for Anthraquinone glycosides f) 0.5g of extract + heat + HCl. Filtrate + Benzene + NH4OH	No colour change	Anthraquinones may be absent
Test for Cyanogenetic glycosides g) Extract + water moistened on sodium picrate paper + heat	Picrate paper turned brick red	Cyanogenetic glycosides may be present
Test for tannins h) Dilute extract with water, add 3-4 drops of 10% ferric chloride solution	No colour change	Tannins may be absent
Test for coumarins I)0.5g of plant extract +Filter paper treated with 1M NaOH + UV light	No yellow fluorescent	Coumarins may be absent
Test for Triterpenoids J) Extract + 2ml chloroform +3ml Conc.H₂SO₄	No colour Change	Triterpenoids may be absent
Test for Steroids H) Extract + 2ml acetic anhydride+ 3ml H₂S0₄	Green colour Observed	Steroids may be present
Test for Flavonoids I) Extract filtered with petroleum ether + dilute ammonia+ Conc.H₂SO₄	Yellow colour Observed	Flavonoids may be present

Table 2 Preliminary photochemical tests on plant bark

TEST	OBSERVATION	INFERENCE
Mayer’s test for alkaloids a) Wagner’s reagent + small portion of bark	No colour change	Alkaloids may be absent
Dragendorff’s test for Alkaloids b) 2ml of dragendorff’s reagent + 1ml of bark	No colour change	Alkaloids may be absent
General Test for Glycosides f) 25ml of dil. H₂SO₄ to 5ml bark and boil for 15mins,	Formation of a brick-red colour	Glycosides may be present
Froth test for saponins e) 0.5g of bark + 1ml of alcohol diluted with 20ml distilled water. Shake well for 2min.	froth formed on standing	Saponins may be present
Test forAnthraquinone glycosides f) 0.5g of bark + heat + HCl. Filtrate + Benzene + NH₄OH	No colour change	Anthraquinones may be absent
Test for Cyanogenetic glycosides g) Bark + water moistened on sodium picrate paper + heat	Picrate paper turned brick red	Cyanogenetic glycosides may be present
Test for tannins h) Dilute bark with water, add 3-4 drops of 10% ferric chloride solution	Dark green colour change	Tannins may be present

Test for coumarins I)0.5g of plant Bark +Filter paper treated with 1M NaOH + UV light	No yellow fluorescent	Coumarins may be absent
Test for Triterpenoids J) Bark + 2ml chloroform +3ml Conc.H₂SO₄	No colour Change	Triterpenoids may be absent
Test for Steroids H) Bark + 2ml acetic anhydride+ 3ml H₂S0₄	Green colour Observed	Steroids may be present
Test for flavonoids I)Bark filtered with petroleum ether+ dilute ammonia to filtrate + Conc. H₂S0₄	Yellow colour Observed	Flavonoids may be present

TABLE 3: DURATION OF LICK OF HIND PAW IN THE FORMALIN PAIN MODEL TEST

	Dose Groups
Experimental Parameter	Vehicle	Aspirin(100mg/kg)	250mg/kg	500mg/kg	1g/kg
Duration of paw licks in seconds(M1)	273	75	97	0	26
Duration of paw licks in seconds(M2)	18	36	28	86	91
Duration of paw licks in seconds(M3)	96	37	64	59	62
Mean of M1-M3	129	74	63	48.3	59.7
S.D. of M1-M3	130.66	22.23	34.51	43.98	32.56

Note: M stands for mouse representing the experimental animals used; S.D stands for standard deviation is a quantity expressing by how much the members of a group differs from the mean value for the group.15 experimental animals were used with each dose group having three different mice.

Figure 1: Graph Plot of Duration of Paw Lick Against Dose Groups Mean/Standard deviation

DISCUSSION.

The bark of Piptadeniastrum africanum was first chopped into smaller sizes and dried by the sun for six weeks to facilitate drying after which it was milled into fine particles and properly stored. Petroleum ether was used as the solvent for extraction from the plant bark. The crude petroleum ether extract was gotten after extraction using the soxlet extractor and concentrating with the rotary evaporator and drying for three days.

Phytochemicals analysis were carried out on the bark of the plant and it showed that glycosides, steroids, tannins, alkaloids, saponins, flavonoids may be present. However; phytochemicals analysis carried out on the crude petroleum ether extract indicated that glycosides, steroids may be present. The absence of the components listed above in the crude petroleum ether extract as compared to the ethanol extract where tannins, alkaloids, flavonoids were present is as a result of the highly polar nature of these components which contain highly polar constituents which are only soluble in polar solvents like ethanol. Ethanol possesses hydrogen and carbon atom bonds which are non- polar covalent bonds also there is hydrogen-oxygen and carbon-oxygen bonds which are polar covalent bonds.

These combinations of polar and non- polar covalent bonds present in ethanol allow for the extraction of both polar and non-polar phytochemicals constituents unlike petroleum ether. The highly aliphatic C5 and C6 hydrocarbons present in petroleum ether makes it very non polar and therefore, polar photochemical constituents like alkaloids, tannins, flavonoids will not be able to be extracted by petroleum ether because they will not be able to be extracted by petroleum ether.

After the phytochemicals analysis, the crude petroleum ether extract was used for the formalin induced pain model test in mice. The extract was prepared in an emulsion as vehicle to be given to the animals orally due to the insolubility of the crude extract in water. Five different dose groups were used in this test the vehicle (emulsion only) which was the negative control, Aspirin 100mg/kg as the positive control, crude extract + emulsion 250mg/kg, crude extract + emulsion 500mg/kg, crude extract + emulsion 1000mg/kg. The mean duration of licks of paw in seconds for each of the groups was 129s, 74s, 63s, 48.3s, and 59.7s, respectively. From the results of the experiments there was a significant reduction in the duration of lick when the vehicle which contained no extract is compared to the extract dose groups or aspirin which is a known analgesic drug with aspirin. However, the dose group of 500mg/kg showed the lowest mean duration of lick when compared to a higher dose of 100mg/kg this is most likely as a result of this dose group being the most potent and effective analgesic form of this dose group of the petroleum ether extract of the plant bark. Another interesting observation that was deduced from the experiment was that in mouse 1 the duration of licks was 0 seconds this could be as result of the pain threshold for that particular animal being very high which we have seen from this experiment varies between animal to animal.

Furthermore, the graph plot was done with the graph prism Software 7.0.From the Figure 3.1 the graph shows a large error bar in the vehicle dose groups this is due to the high variability of the different values gotten of 273s, 18s, 96s meaning the results gotten could have been by chance and due to this there was a significant overlap in the error bar of the other dose groups since the result of the vehicle could have been as high as 273s or as low as 18s which was even lower than the duration of paw licks observed for some of the crude extract dose groups and aspirin, This high variability was a result of the this been the first dose groups that we performed so there could have been issues in dosing the animal or even the handling of the animal for them to properly open their mouths to insert the vehicle because of the limited number of animals of only 15 and so three per dose group the experiment could not be repeated to narrow the variability. Therefore, upon further analysis of the graph although there was a significant reduction in the duration of licks of paw of the various extract dose groups showing some form of analgesia as compared to the vehicle the results were statistically insignificant to be able to ascertain for certain if the petroleum ether extract has analgesic activity or not.

4.2 CONCLUSION

The conclusion drawn from the phytochemical and analgesia study on the crude petroleum ether extract of bark of Piptadeniastrum africanum shows that;

Steroids, Flavonoids glycosides, may be present in the crude extract

The absence of Alkaloids, tannins, saponins, flavonoids in the crude extract may be due to the use of the non- polar solvent petroleum ether for the extraction process

There may be analgesic property present in the crude extract but the results of the experiment were statistically insignificant to determine for certain if there is analgesic property or not.

Further test is needed with a higher number of experimental animals to be able to adequately ascertain the presence of analgesia in the crude extract.

4.3 RECOMMENDATIONS

Further research should be carried out with a larger number of experimental animals to be able to ascertain to a higher level of certainty whether the crude petroleum ether extract has analgesic activity or not.

CONFLICT OF INTEREST

We have no conflict of interest to disclose.

ACKNOWLEDGMENT

We sincerely appreciate the Department of Pharmaceutical Sciences at Central University Ghana for their excellent support, encouragement, resources throughout the process for this research work.

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Assessing the Impact of Corporate Governance on Financial Performance of Deposit Money Banks in Nigeria

Tags : Audit Committee Board Composition Board Size Corporate Governance Financial Performance.

Category : Latest Publications

ASSESSING THE IMPACT OF CORPORATE GOVERNANCE ON FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

¹Gabriel Tobi Edu &²Lucky Inaya

¹Department of Banking and Finance, Delta State Polytechnic, Ogwashi-Uku,Delta State,

²Department of Accountancy, Delta State Polytechnic, Ogwashi-Uku, Delta State, Nigeria.

Corresponding Author: ¹Gabriel Tobi Edu

ABSTRACT: Corporate governance is the system by which business corporations are directed and controlled. In banks, quality corporate governance is critical to winning and retaining customer confidence and patronage. This study investigated the effect of corporate governance on the financial performance of some Deposit Money Banks (DMBs) in Nigeria from 2010-2019. Ex-post facto design was adopted in the study. Using secondary data from the annual reports and accounts of the sampled banks, the independent variables were board size (bods), board composition (bodcomp), audit committee (audcom), while the dependent was financial performance proxied by net interest margin (nim), return on assets (roa) and return on equity (roe). Multi-regression model was employed in the analysis. The findings showed that corporate governance has no significant effect on the reported figures for NIM, ROA and ROE. Thus, the study recommends among others, that board size should be monitored closely for better performance. This study expanded the quest for the influence of corporate governance on firms’ performance especially as it relates to Nigerian Deposit Money Banks (DMBs).

KEYWORDS: Corporate Governance, Board Size, Board Composition, Audit Committee, Financial Performance.

I. INTRODUCTION

Corporate governance details the rules and regulations that ensure that a company is governed in a transparent and accountable manner such that the company survives and meets the expectation of its shareholders, creditors and other stakeholders (Akpan and Amran, 2014). It is not just corporate management; it also involves an effective, efficient and transparent administration to meet certain well-defined objectives (McIntyre, Murphy and Mitchell, 2007).

An important aim of corporate governance is the nature and extent of accountability of particular individuals in the organization and mechanisms that try to reduce or eradicate the principal–agent problem of poor corporate governance (Uwuigbe and Fakile, 2012). For the banking sector, Okafor (2011) argues that good corporate governance validates management integrity and defines the quality of financial services offered by banks, thereby influencing the sector’s overall performance. Corporate governance in the banking industry provides the platform that is used to attract investors both local and foreign with the trust that their investment will be safe and properly utilized in the best possible means of managing an investment (Mohammed and Farouk, 2014; Abdulazeez, Ndibe and Mercy, 2016). Corporate governance has the capacity to strengthen investors’ confidence in the economy of a country (Hermalin and Weisbach, 2003), besides, stabilizing and strengthening financial markets, protect investors, promote firm performance, and attract investments (Cheema & Din, 2013) and in particular, boost public confidence and ensure effective and efficient functioning of the banking system (Soludo, 2004).

Poor corporate governance may contribute to bank failure which can pose significant public cost and consequences (Rahman and Islam 2018; Hajer and Anis 2016; Onofrei, Firtescu, and Terinte, 2018). Massive corporate failures resulting from weak systems of corporate governance have highlighted the need to improve and reform corporate governance at an international level. Egungwu and Egunwu (2018); Adigwe, Nwanna and John (2016), and Ugwuanyi and Amanze (2014) all opined that the failure of banks in Nigeria and elsewhere has been largely due to merely inadequate corporate governance and failure of professional ethics. This is manifested in numerous instances of creative accounting practices, professional insensitive internal control and risk management position been seriously compromised even to the point of colluding with fraudsters. Non-adherence to corporate governance was identified as one of the critical issues in virtually all known instances of financial distress in the past (Okonkwo and Azolibe, 2020).

The board of directors plays an important role in improving corporate governance and the value of a firm (Hanrahan, Ramsay and Stapledon, 2001). Adekunle and Aghedo (2014) reveal a robust positive impact transmission from board size and its composition to firm performance. Ogege and Boloupremo (2014) posit that board composition also improves profitability of Nigerian banks. Yermack (1996), believes that the smaller the board size, the better the firms performance, and proposed an optimal board size of ten or fewer, stressing that large boardrooms tend to slow down decision making, and hence can be an obstacle to change. The composition of the board according to Companies and Allied Matters Act (1990) is a mix of executive and non- executive directors but not exceeding 15 or less than 5 members with separate positions for the chairman and chief executive officer. Tijjani and Anifowose (2013) pointed out that poor performance of boards can erode investors’ confidence in banks and lead to investors divesting their investments that can paint a poor image of the financial sector. Thus, the relationship of the board and management, according to Al-faki (2006), should be characterized by transparency to shareholders, and fairness to other stakeholders.

The multifaceted corporate governance problems in the Nigerian banking sector (Yauri, Muhammed & Kaoje, 2012) and frequent banks collapse resulting poor corporate governance and internal control systems have reawakened the need to improve and reform corporate governance at both domestic and international levels (Onakoya, Ofoegbu and Fasanya 2011).

Considerable scholarly evidence on the effect of corporate practices on financial performance of banks abounds in literature, though with contrasting views. Studies in Nigeria by Nguyen and Tran (2017), and Onakoya, Ofoegbu and Fasanya (2011), all point to the fact that good corporate governance positively affects banks performance. However, some studies particularly from outside Nigeria, like Love and Rachinsky (2013) in Russia and Naushadi and Malik (2015) in Canada, have failed to establish a link between corporate governance and bank performance, thereby, revealing that many empirical literatures lack consensus or established significant influence of corporate governance on financial performance of banks, and indicating the existence of a research gap.

Also, not many studies have considered how audit committee affects profitability. For instance, if the auditors are not independent and do not perform their duties with professional diligence, the value of the firm may suffer. Using the multivariate regression approach, this research will investigate how profitability ratios respond to board size and board composition as well as audit committee in the businesses.

II. REVIEW OF RELATED LITERATURE

Conceptual Review

Corporate Governance Mechanism

Corporate governance mechanisms are policies, guidelines and control to manage an organization and reduce inefficiencies. Business owners and leaders use corporate governance mechanism to help managers and employees understand the acceptable behavior when completing business functions. A corporate governance structure combines controls, policies and guidelines that drive the organization toward its objectives while also satisfying stakeholders’ needs. Corporate governance mechanism can be internal or external in nature. The internal mechanism controls monitor the activities and progress within the organization and take corrective measures when necessary. They include, in particular, board of directors, audit committees, auditor, ownership structure, mutual monitoring and supervisory board

External control mechanisms on the other hand, are controlled by those outside an organization and serve the objectives of entities such as regulators, governments, trade unions and financial institutions. These objectives include adequate debt management and legal compliance. External mechanisms are often imposed on organizations by external stakeholders in the form of union contracts or regulatory guidelines. External organizations, such as industry associations, may suggest guidelines for best practices, and businesses can choose to follow these guidelines or ignore them. Typically, companies report the status and compliance of external corporate governance mechanisms to external stakeholders.

Combined Code of Corporate Governance

The Combined Code originally issued in 1998 drew together the recommendations of “Cadbury, Greenbury, and Hampel reports” (Uwuigbe, 2011). The Combined Code (2003) incorporates a number of key issues as addressed by the Higgs Report (2003) relating to corporate governance principles; the role of the board and chairman; the role of non-executive directors and audit and remuneration committees.

These recommendations include a revised Code of Principles of Good Governance and Code of best practice; relating to the recruitment, appointment and professional development of nonexecutive directors. Also, included is “Related Guidance and Good Practice Suggestions” for nonexecutive directors, chairman, performance evaluation checklist; as well as a summary of the principal duties of the remuneration and nomination committees. Some of the main reforms included that at least half of the Board of Directors should comprise of non-executive directors, the Chief Executive Officer (CEO) should not be the chairman of the board and should be independent, board and individual directors” performance evaluation should be regularly undertaken, and that formal and transparent procedures be adopted for director recruitment.

In addition, the Nigerian Code of Corporate Governance 2018 was introduced to institutionalize corporate governance best practices in Nigerian companies. The Code is also to promote public awareness of essential corporate values and ethical practices that will enhance the integrity of the business environment. By institutionalizing high corporate governance standards, the Code will rebuild public trust and confidence in the Nigerian economy, thus facilitating increased trade and investment. Companies with effective boards and competent management that act with integrity and are engaged with shareholders and other stakeholders are better placed to achieve their business goals and contribute positively to society.

Theoretical Review

Stakeholder Theory

This stakeholder theory was propounded by Freeman in 1984. The theory centres on how to strike a balance between the interests of its diverse stakeholders in order to ensure that each interest constituency receives some degree of satisfaction (Clark, 2004). It attempts to address the question of which groups of stakeholder deserve and require management’s attention (Sundaram and Inkpen, 2004). By stakeholders, it means all persons or groups including governmental bodies, political groups, trade associations, trade unions, communities, associated corporations, prospective employees and the general public with legitimate interests participating in an enterprise expectant of benefits and without any prima facie priority of one set of interests and benefits over another (Clark, 2004). With this, the stakeholder theory is better in explaining the role of corporate governance than the other theories by highlighting different constituents of a firm, not minding the initial misconception of narrowing to shareholders as the only interest group (Coleman, 2008). Stakeholder theory has become more prominent because many researchers have recognized that the activities of a corporate entity impact on the external environment requiring accountability of the organization to a wider audience than simply its shareholders

This study is anchored on the stakeholder theory because it offers a framework for determining the structure and operation of the firm that is cognizant of the myriad of participants who seek multiple and sometimes diverging goals (Donaldson and Preston 1995).

Empirical Review

Olabisi & Omoleye (2011) investigated the relationship between corporate governance and the performance of banks in Nigeria. The study made use of a sample of five consolidated banks. One hundred and thirty questionnaires were administered on the management staff of those selected banks, out of which 120 were returned and 10 were not properly filled. Statistical Package for Social Scientist (SPSS) was used to analyze the data collected and interpretation of data was done through simple percentages. Pearson Product Moment Correlation was used to test the relationship that exists between efficient Corporate Governance in the banking sector and the roles of external auditor and the composition of the board of directors. The study revealed that, lack of proper corporate governance is the bane of so many banks in Nigeria. The collapse and failure of many banks was as a result of both poor audit control and directors’ negligence to observe due diligence and acceptable standard practices.

Grove, Patelli, Victoravich, & Xu (2011) carried out an empirical study on corporate governance and performance in the wake of the financial crisis using commercial banks in United States. The objective of the study was to examine if corporate governance will explain bank performance during the period leading up to the financial crisis? They adopted the factor structure by Larcker, Richardson, and Tuna (2007) to measure multiple dimensions of corporate governance for 236 public commercial banks. Findings revealed that corporate governance factors explain ﬁnancial performance better than loan quality. They also found out that strong support for negative association between leverage and both ﬁnancial performance and loan quality. Findings also showed a concave relationship between ﬁnancial performance and both board size.

Okonkwo & Azolibe (2020) conducted an extensive research study on the effectiveness of corporate governance in Nigerian banks for the period 2006-2018. The study adopted secondary time series data obtained from annual reports of banks, publications of the Central Bank of Nigeria and Nigeria Stock Exchange annual reports and factbook. A diagnostic test was conducted to ensure that the models are in line with basic econometric assumptions. The granger causality test was applied to examine the effect of the independent variable on the dependent variable. The findings show that corporate governance has a significant effect on performance. It recommends an optimum proportion of outside directors for effective governance impacting performance positively.

Sarpong-Danquah, et al. (2018) carried out a research to consider the link between corporate governance and performance of quoted manufacturing firms in Ghana, selected 11 manufacturing firms and analyzed their financial report for the years 2009 to 2013. The study findings are that there is a strong positive link between board independence and equity return, and no statistical relationship between board size and return on equity. Generally, banks occupy an important position in the economic equation of any country such that its (good or poor) performance invariably affects the economy of the country. Poor corporate governance may contribute to bank failures, which can increase public costs significantly and consequences due to their potential impact on any applicable system. Poor corporate governance can also lead markets to lose confidence in the ability of a bank to properly manage its assets and liabilities, including deposits, which could in turn trigger liquidity crisis.

Ibe, et al. (2017) explored the effect of a corporate governance system on the financial performance of Nigerian insurance companies using 20 companies and found that the size of the board has a negative and significant impact on shareholder return while the board’s independence and net profit margin have a significant positive relationship. They specifically stated that there is no significant positive association between the remuneration of executive directors and the return on asset but the remuneration of non-executive directors has a significant negative impact on the return on asset

Hajer & Anis (2016) carried out a study on the impact of governance on bank performance: using commercial banks in Tunisian. Their empirical analysis was on a sample of eight Tunisian commercial banks listed on the Stock Exchange over the period 2000–2011. Findings from the study showed that there is no standard governance structure and that each bank should adopt the appropriate governance structure to improve the performance of the financial market, in general, and the banking market, in particular.

III.METHODOLY

This study adopted the ex-post facto research design. The motive being that the data for the study already exit and can neither be manipulated nor changed. Data on audited annual financial statements of the 13 banks under study covering a period of 10 years (2010-2019) were retrieved from the database of the Central Bank of Nigeria (CBN).

The empirical model is estimated as follows:

FinPerf = F(bods) eq.1

FinPerf = F(bodcomp) eq.2

FinPerf = F(Audcom) eq.3

Equations 1-3 capture the interaction between the dependent and independent variables of the study; however, equations 4-6 captures the explicit form of the regression models as follows:

FinPerf_it=α₀+ α₁bods_it +ε_it eq. 4

FinPerf_it=α₀+ α₁bodcom_it +ε_it eq. 5

FinPerf_it=α₀+ α₁Audcom_it +ε_it eq. 6

Where: bods: Board size; bodcom: Board composition; audcom: Audit committee; FinPerf: Financial performance (measured by net interest margin, return on asset and return on equity); i=Individual deposit money banks; t=time frame; ε = Error Term; α₁ = regression coefficient.

In this study, the multivariate regression estimation technique was employed data. This method was adopted because the study is composed of multiple dependent and independent variables. The analysis was done in sections: descriptive statistics (mean, standard deviation, minimum and maximum value, correlation coefficient, variance inflator factor, and Breusch-Pagan and Cook-Weisberg test for heteroskedasticity) and inferential statistics (Multivariate Regression).

Data Analysis

The analysis was done in order of precedence; first, descriptive statistics of the variables; second, correlation matrix (Pearson correlation) third, variance inflation factor and heteroscedasticity, and fourth, the results of the Multivariate Regression and all results are presented in tabular forms.

Descriptive Statistics

Table 4.1: Summary of Descriptive Analysis

Source: Researcher’s Computation, 2022.

Table 4.1 shows the mean (average) of the dependent (return on equity –ROE; return on asset – ROA and net interest margin – NIM) and independent (audit committee –audc; board size – bods and board composition –bodcomp) variables of the study, their standard deviation (magnitude of dispersion), skewness as well as the minimum and maximum values. The results shed light on the nature of the selected DMBs in Nigeria. First, net interest margin (nim) shows the highest average with value of 17.89; this was followed by corporate governance variable of board composition (bodcomp) with value 16.80. Nim shows the highest dispersion with a standard deviation value of 16.75, which was closely followed by bodcomp with a standard deviation value of 15.58.

The dispersion of corporate governance and financial performance measures showed that the sampled DMBs are not too dispersed from each other; an indication of relative change in governance composition, size and audit committee as well as the performance of the DMBs. The variation of the study variables during the period under review was captured by the minimum and maximum values. The results of the minimum values revealed that corporate governance variable of bodcomp is zero (0) while bodcomp recorded the highest value (60); the maximum value was recorded by Stanbic IBTC Bank in 2010.

Furthermore, the skewness result shows that all corporate governance variables (audc = 1.71; and bodcomp= 0.68) are positively skewed with financial performance, except board size (bods = -0.108) that is negatively skewed with financial performance measures. Again, whether the corporate governance and financial performance variables negatively or positively correlate was assessed using the correlation matrix (Pearson correlation); the results are presented in Table 4.2.

Pearson Correlation

Table 4.2: Correlation Matrix

Source: Researcher’s Computation, 2022.

In Table 4.2, the result shows that audc (0.0112), bods (0.0476), and bodcomp (0.1220) are positively correlated with financial performance measures. Moreover, the correlation matrix also revealed that no two (2) explanatory variables of the study were perfectly correlated, since none of the correlation coefficients exceed 0.9. The result of correlation is confirmed using the Variance Inflation Factor (VIF) (for testing for the presence of multicollinearity) and Breusch-Pagan and Cook-Weisberg results (for testing for the presence of heteroskedasticity).

4.2.3 Variance Inflation Factor (VIF) Test for Multicollinearity

Table 4.3: VIF Result

Source: Researcher’s Computation, 2022.

The result of mean VIF=1.01, which is less than the accepted mean VIF value of 10.0; impliedly, there is non-existence of multicollinearity problems in the specified models of corporate governance and financial performance. Again, the VIF result suggests that the specified corporate governance and financial performance models are void of econometric biases and the results can be relied upon.

Breusch-Pagan and Cook-Weisberg Test for Heteroskedasticity

Table 4.4: Breusch-Pagan and Cook-Weisberg Result

Source: Researcher’s Computation, 2022

Table 4.4 shows the Breusch-Pagan and Cook-Weisberg results; the result revealed that variables corporate governance and financial performance fit-well in the specified models of the study, since chi2(1) = 45.45 and Prob. > chi2 = 0.0000, which is statistically significant at 0.05% level; this suggests that there is non-existence of heteroskedasticity problem in the specified models of corporate governance and financial performance of DMBs in Nigeria.

Test of Research Hypotheses

Table 4.5: Multivariate Regression Results for Board Size (bods)

and Financial Performance (roe, roa and nim) of DMBs in Nigeria

Source: Researcher’s Computation, 2022.

Table 4.5 shows the multivariate regression estimation coefficients, t-statistics, probability of t-statistics, probability of f-statistics as well as R² of the models of corporate governance and financial performance. A careful examination of the result showed that R-squared for return on equity (roe) is 0.0023, return on asset(roa) is 0.0219 and net interest margin (nim) is 0.0173; this imply that the independent variable (board size –bods) explained about 0.23%, 2.19% and 1.73% of the systematic variations in the dependent variables (roe, roa and nim). The small R-squared suggests that there are other excluded variables that determine financial performance other than the size of the board alone.

Furthermore, the Prob. F-statistics (roe = 0.2901001; roa = 2.871771 and nim = 2.25259) with probability value of 0.5911, 0.0926 and 0.1359 respectively revealed that the results are insignificant at 5percent level; this suggests that board size insignificantly affects financial performance of DMBs in Nigeria. Again, an increase in governance attribute (bods) will lead to a decrease in roe, roa and nim by 0.556%, 0.101% and 1.058% respectively. Also, the results are further supported by the t-values, indicating that while board size insignificantly affects financial performance of DMBs in Nigeria, the result is positive.

Decision: The Prob. value for all financial performance variables (roe, roa and nim) are greater than 0.05, indicating a rejection of the alternate hypothesis and acceptance of the null hypothesis, which implies that board size does not have significant effect on the net interest margin, return on assets and return on equity reported by deposit money banks in Nigeria.

Table 4.6: Multivariate Regression Results for Board Composition (Bodcomp)

and Financial Performance (roe, roa and nim) of DMBs in Nigeria

Source: Researcher’s Computation, 2022.

Table 4.6 shows the multivariate regression estimation coefficients, t-statistics, probability of t-statistics, probability of f-statistics as well as R² of the models of corporate governance and financial performance. A careful examination of the result showed that R-squared for return on equity (roe) is 0.0149, return on asset(roa) is 0.0159 and net interest margin (nim) is 0.0128; this imply that the independent variable (board composition–bodcomp) explained about 1.49%, 1.59% and 1.28% of the systematic variations in the dependent variables (roe, roa and nim). The small R-squared suggests that there are other excluded variables that determine financial performance other than the composition of the board alone.

Furthermore, the Prob. F-statistics (roe = 1.932651; roa = 2.068151 and nim = 1.657779) with probability value of 0.1669, 0.1528 and 0.2002 respectively revealed that the results are insignificant at 5percent level; this suggests that board composition insignificantly affects financial performance of DMBs in Nigeria. Again, an increase in governance attribute (bodcomp) will lead to a decrease in roe, roa and nim by 0.460%, 0.027% and 0.294% respectively. Also, the results are further supported by the t-values, indicating that while board composition insignificantly affects financial performance of DMBs in Nigeria, the result is positive.

Decision: The Prob. value for all financial performance variables (roe, roa and nim) are greater than 0.05, indicating a rejection of the alternate hypothesis and acceptance of the null hypothesis, which implies that board composition does not have significant effect on the net interest margin, return on assets and return on equity reported by deposit money banks in Nigeria.

Table 4.7: Multivariate Regression Results for Audit Committee (Audcom)

and Financial Performance (roe, roa and nim) of DMBs in Nigeria

Source: Researcher’s Computation, 2022

Table 4.7 shows the multivariate regression estimation coefficients, t-statistics, probability of t-statistics, probability of f-statistics as well as R² of the models of corporate governance and financial performance. A careful examination of the result showed that R-squared for return on equity (roe) is 0.0001, return on asset (roa) is 0.0270 and net interest margin (nim) is 0.0306; this imply that the independent variable (audit committee – audcom) explained about 0.01%, 2.70% and 3.06% of the systematic variations in the dependent variables (roe, roa and nim). The small R-squared suggests that there are other excluded variables that determine financial performance other than the composition of audit committee.

Furthermore, the Prob. F-statistics (roe = 0.016035; roa = 3.554135 and nim = 4.045318) with probability value of 0.8994, 0.0617and 0.0464 respectively revealed that the results are insignificant at 5percent level; this suggests that audit committee insignificantly affects financial performance of DMBs in Nigeria. Again, an increase in governance attribute (audit committee) will lead to a decrease in roe, roa and nim by 0.993%, 0.851% and 10.68% respectively. Also, the results are further supported by the t-values, indicating that while audit committee insignificantly affects financial performance of DMBs in Nigeria, the result is positive.

Decision: The Prob. value for all financial performance variables (roe, roa and nim) are greater than 0.05, indicating a rejection of the alternate hypothesis and acceptance of the null hypothesis, which implies that audit committee does not have significant effect on the net interest margin, return on assets and return on equity reported by deposit money banks in Nigeria.

IV. CONCLUSION

This study investigated the effects of corporate governance on the financial performance of Deposit Money Banks (DMBs) using several governance mechanisms such as board size, audit committee, and board composition and financial performance measures of return on asset, return on equity and net interest margin. Given the inferential statistics results, the study concludes that corporate governance attributes do not significantly affect the financial performance of Deposit Money Banks (DMBs) in Nigeria.

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November 5, 2022
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Impact of Programme Duration and Staff Commitment on the Effectiveness of ADAPTI in Colleges of Education in Cross River and Ebonyi States of Nigeria

Tags : ADAPTI Capacity building Intervention

Category : Latest Publications

IMPACT OF PROGRAMME DURATION AND STAFF COMMITMENT ON THE EFFECTIVENESS OF ADAPTI IN COLLEGES OF EDUCATION IN CROSS RIVER AND EBONYI STATES OF NIGERIA

Dr. Israel, Paul Chijioke

Psychology Department

Federal College of Education

Obudu

And

Mrs. Israel, Happiness Cherechi

Christian Religious Studies Department

Federal College of Education

Sponsored by the Tertiary Education Trust Fund (Tetfund)

Abstract

This study was executed to find out how the time allotted to the Advanced Digital Appreciation Programme for Tertiary Institutions (ADAPTI) and the commitment of the staff of colleges of education in Cross River and Ebonyi states of Nigeria are affecting the effectiveness of the programme. The descriptive survey research design was adopted in conducting the study. Five approved colleges of education in Cross River and Ebonyi states of Nigeria formed the population of the study out of which a sample of three was purposively drawn. Subsequently, three hundred and sixty Academic and Non-academic staff were randomly drawn from the three colleges. Two research questions and one hypothesis guided the study. The data for the study were collected using researchers’ constructed instrument called Advanced Digital Appreciation Programme for Tertiary Institutions Evaluation Questionnaire (ADAPTIEQ). The instrument has a Crombach Alpha reliability coefficient of .86. The collected data were analyzed using both the descriptive and inferential statistics. The result of the analysis showed that the short period of time allotted to this programme was a factor militating against its effectiveness. Consequently, it was recommended among other things that a period of not less than one month be allotted to this programme in order to enable the facilitators cover the course content.

Key words: ADAPTI, Capacity building, Intervention.

Introduction

Since the realization of the critical role of Information and communication technology (ICT) towards the development of any nation, the Federal Government of Nigeria has taken different measures towards the building, encouragement, development, utilization and sustenance of ICT manpower Education (FME, 2019). These measures include:

The use of the National Policy on ICT in Education to drive the development and deployment of ICT in Education in the country,

The provision of relevant ICT infrastructure and services

Establishment of ICT laboratories in schools and Centers of Excellence in the tertiary institutions

Introduction of e-learning and application of ICT to Distance Education and Open Learning at all levels

ICT capacity building for teachers and educational administrators through nationally and internationally recognized certificates

Construction of e-libraries in Federal Schools and virtual libraries for universities

The development and use of the National Standards for IT education to set academic and professional standards for ICT Education at all levels, etc.

Basic among these measures is the development of National policy on ICT in Education by the Federal Ministry of Education in conjunction with Federal and State Ministries and Agencies, the Private Sector, Non-Governmental Organizations and International Development Partners. The Policy Document for the development and deployment of ICT in Education was approved by the National Council on Education and the Federal Executive Council in 2010 (FME, 2019). At the tertiary education level, mobile learning is taking place in some states and virtual libraries are being constructed for tertiary institutions.

In spite of the above initiatives, Bamidele and Bakare (2015) found that computer education as a subject was not taught in most public secondary schools in the country after a study of the impediments to the implementation of computer science education curriculum in public secondary schools in Osun state, Nigeria. Also in a study of the implementation of computer education policy in Cross River state Israel and Israel (2019) found that the effectiveness of teaching and learning of computer science and the application of ICT in education has been retarded by such factors as poor funding by the government, and especially non-availability of adequate number of trained computer/ICT teachers.

This development draws attention to the importance of building the ICT capacity of staff of various tertiary institutions on whose onus lays the task of driving ICT in education. Capacity building refers to the process of improving the competencies and capabilities of an individual or a group of people or institutions with a view to enhancing their performance/output. Nwokedi, Amaewhule, and Nwafor (2018) define capacity building of lectures as a commitment to structured skills enhancement and personal or professional competence for effective service delivery. Contributing from the stand point of view of capacity building of lecturers in electrical/electronic technology, Bakare, Onah and Okereke (2018) define capacity building as the set of activities directed towards improving competencies and capacities of lectures in electrical/electronic technology in operating e-teaching facilities for effective delivery in universities. The United Nations Environmental Programme (as cited in Akuegwu, Nwigwe and Etudo-Eyo, 2013) defines capacity building as building abilities, relationships and values that will enable organizations, groups and individuals to improve their performance and achieve their developmental objectives.

The important role ICT plays in education underscores the need to build the capacity of teachers in this field of study. This reasoning explains Mbwana’s (2009) submission that the success in the use of ICT in education depends largely on teachers and their level of skills in integrating ICT into the teaching process and in utilizing ICT to provide learner-centered, integrative education. Nwokedi, Amaewhule, and Nwafor (2018) also agree that the use of ICT devices help lecturers in teaching the students for effective service delivery and equally assist them in their academic research and development. Similarly, UNESCO (2018) highlighted the importance of training teachers in ICT by remarking that teacher training and continued on-going relevant professional development for teachers are essential if benefits from investment in ICT are to be realized. Specifically, UNESCO pointed out that training and on-going support must enable teachers to develop the necessary ICT competencies so they can in turn ensure their students develop the relevant skills, including digital competencies for life and work.

The fact that capacity building is important to both academic and non-academic staff is attested to by Nwabueze and Edikpa (2018) when they posit that human capacity building is aimed at equipping the academic and administrative staff with skills that will enable them discharge their professional responsibilities effectively. The Federal Ministry of Education (2019) has also expressed the view that the development of human capital for realizing the national vision needs to be enhanced by a new set of knowledge, skills and attitude, and the individual citizen needs to be fully equipped to be competitive as well as meet the challenges of the emergent environment.

In response to this need, some ICT capacity building interventions for teachers and educational administrators have been embarked upon. One of such interventions is the Advanced Digital Appreciation Programme for Tertiary Institutions (ADAPTI). This programme is offered by the Digital Bridge Institute (DBI) –a body set up in 2004 by the Nigerian Communications Commission (NCC) to train both academic and non-academic staff of tertiary institutions in basic ICT, office productivity tools, including the internet, intranet, use of e-teaching and e-learning facilities as well as collaboration in course delivery at no cost to the participants (DBI, 2020).

In order to accommodate more trainees into this programme, the modality for the training was shifted from inviting staff from different tertiary institutions to a central place to taking the training to their respective institutions where a reasonable number of staff could participate. The Colleges of Education just like other tiers of tertiary institutions in the country have benefited consistently in this programme since 2006 when the DBI started the ADAPTI programme. Experience has however shown that despite the participation of many tertiary institution’s staff in this capacity building initiative, many academic staff in tertiary institutions in the country are still not computer literate. It has also been reported that the extent to which education lecturers apply ICT packages in academic activities for knowledge building is low (Nwabueze, Nwokedi, and Edikpa 2018). The inability to meaningfully apply ICT skills in teaching on the part of some academic staff and to handle effectively some administrative functions using ICT tools on the part of some non-academic staff who have participated severally in the ADAPTI programme demands the investigation of some factors that may affect the effectiveness of this programme. Among such factors are the duration of time allotted to this programme and the commitment to the programme by those staff undergoing the training. The problem of this study therefore when stated in question form is: How adequate is the time duration allotted to the ADAPTI programme and what is the level of commitment of the trainees towards the programme?

It is the objective of this study to investigate the impact of time duration and staff commitment on the effectiveness of the ICT capacity building intervention offered by the Digital Bridge Institute tagged Advanced Digital Appreciation Programme for Tertiary Institutions (ADAPTI). The study will specifically determine:

How the time allotted to the training programme affects its effectiveness.

How committed to the training programme are the participating staff.

The significance of the study lies in the fact that it will serve as a basis for the DBI and the various Colleges to take appropriate measures towards enhancing the effectiveness of this capacity building intervention. When this is done, the staff will be able to apply ICT in their job performances and thus derive the benefits of increased productivity. Students who will be taught by such ICT competent lectures will also graduate with the needed ICT skills that will help them be either gainfully employed or become employers of labour themselves.

The study was guided by the following research questions and hypothesis:

How adequate is the time period allotted to the ADAPTI programme in relation to the course content?

To what extent do the trainees demonstrate commitment to the training programme?

H_01:The Academic and their non-academic counterparts do not differ significantly on their mean perception of the adequacy of time allocated for the training programme.

Method

Design of the Study

The study was aimed at determining, documenting and describing the current state of implementation of the ADAPTI intervention as perceived by the respondents and so was conducted using the descriptive survey research design.

Area of the Study

The study was conducted in Cross River and Ebonyi states of Nigeria. Cross River state is located in the South-South geo-political zone of the country whereas Ebonyi state is located in the South-East zone. The two states however share a common boundary. There are a number of tertiary institutions in these states. These include universities, colleges of education, schools of nursing, midwifery, and polytechnics.

Population of the study: The population of the study comprised all the five accredited colleges of education in the two states. One of these colleges is owned by the Federal Government; two are owned by State Governments, whereas the other two are private institutions. In terms of staff, the population comprises all academic and non-academic staff in the five colleges.

Sample and Sampling Technique

The multi-stage sampling technique was used to constitute the sample. In the first stage, the purposive sampling was used to draw three public colleges out of the five colleges of education in the two states. The restriction of the study to public Colleges of Education was to ensure that only the Colleges where the ADAPTI Capacity Building Programme is offered are included. The second stage consists of the stratification of the staff into two groups on the basis of their job description. Thus, we have the academic and non-academic strata respectively. From the academic staff category, 220 staff were drawn whereas from the non-academic staff category, 140 staff were drawn to make up a sample of 360 staff from the three colleges.

Instrument for Data Collection

The data was collected using a researchers’ constructed questionnaire called Advanced Digital Appreciation Programme for Tertiary Institutions Evaluation Questionnaire (ADAPTIEQ). The ADAPTIEQ has two main parts. The first part was used to collect biographical information from the respondents whereas the second part is made up of 12 items divided into two sections in line with the research questions.

Reliability of the Instrument

Following a pilot testing of the instrument, a Cronbach Alpha correlation coefficient of .84 was computed for ADAPTIEQ. This high magnitude of the reliability coefficient warranted the use of the instrument for the study.

Method of Data Collection

The researchers with the help of their research assistants administered the instrument to respondents in the three colleges. The apathy exhibited by some of the respondents, made it difficult to collect all of the administered copies. Thus, only 312 completed copies used for the study could be retrieved from the three colleges after more than one week of administering them.

Method of Data Analysis

The research data were analyzed using both descriptive and inferential statistics. Specifically, the descriptive statistics (mean and standard deviation) were computed for each item and for each sub-section and used to answer the research questions. Also, the independent sample t-test was used to test the hypothesis.

Results

Research question 1: What is the impact of the programme’s duration on the effectiveness of the training?

The data in table 1 furnish the basis for answering this question. Any statement that has a mean score below 2.50 is said to be disagreed with; a statement with a mean score of between 2.50 and 3.49 is said to be agreed with; whereas a statement with a mean score of 3.50 and above is said to be strongly agreed with.

Table 1

Impact of Programme Duration on the Effectiveness of ADAPTI Training (N=312)

S/N	ITEMS	MEAN	S.D.^*	REMARK
The short period assigned to the programme resulted in the following:
1	Facilitators rushed their lectures in order to cover the cause content	3.28	.86	Agree
2	Many topics in the training manual were not taught	2.62	.82	Agree
3	The trainees did not master thoroughly the topics taught	2.67	.97	Agree
4	The practical application of the topics in the work place were not emphasized	2.34	.85	Disagree
5	The trainees still find it difficult to utilize ICT tools in both teaching and office works	2.70	1.00	Agree
	Grand mean	2.7	.80	Agree

*=Standard deviation

Table 1 shows that the respondents agreed to 4 out of the five statements that assessed the impact of the programme’s duration on the effectiveness of the training. A grand mean of 2.7 shows the acceptance of these statements. It goes to say therefore that the short period of time assigned to this programme impacts negatively on the effectiveness of the programme.

Research Question 2: To what extent do the trainees show commitment to the training?

This question is answered using responses to items in table 2.

Table 2

Trainees’ Level of Commitment to the ADAPTI Training (N=312)

S/N	ITEMS	MEAN	S.D.^*	REMARK
1	Attended classes regularly	3.54	.54	Strongly agree
2	Were always punctual to classes	3.40	.53	Agree
3	Listened attentively to the teachers	3.48	.54	Agree
4	Participated actively in class activities	3.26	.55	Agree
5	Stayed in class till the end of each day’s lectures	3.27	.74	Agree
6	Did all the assignments given by facilitators	2.84	.60	Agree
7	Played truancy during classes	2.01	.91	Disagree
	Grand Mean	3.11	.42	Agree

*=Standard deviation

Table 2 shows that the respondents agreed with 6 out of the 7 items that investigated trainees’ level of commitment to the programme. They however disagreed with the statement that the trainees played truancy during the training session. A grand mean of 3.11 is an indication that the trainees were committed to the training though not at a very high level.

Hypothesis: There is no significant difference (P< .05) in the mean perception of the impact of the programme duration on the effectiveness of the training by the Academic and Non-academic staff of the colleges.

This hypothesis was tested using the independent t- test statistics. Table 3 shows the result of the test.

Table 3

Independent t-test of Mean Difference between Responses of Academic and Non-academic Staff to the Impact of ADAPTI Duration on the Programme’s Effectiveness.

Staff Status	N	Mean	Mean Difference	df	Std Error Diff.	t	Sig
Teaching Staff Non-teaching	202 110	2.855 2.932	-.0764	310	.0678	-1.127	.261

Table 3 shows a t value of -1.127. This value as seen in the table is significant at .261 level. Since this value is greater than .05, the computed t-value is not significant at 5% level. This means that the null hypothesis is accepted at .05 level of significance. It goes to say that the Academic and Non-academic staff in the colleges agree to the view that the duration of the programme impacts negatively on the effectiveness of the ADAPTI programme.

Discussion

The first research question sought to know the impact of the programme’s duration on the effectiveness of the training. The finding in this regard was that the short period of 5 days usually assigned to the ADAPTI programme impacted negatively on the effectiveness of the programme. Specifically, the facilitators did rush their lectures in order to cover the course content; many topics in the training manual were not taught; the trainees could not master some of the topics taught; and the trainees still find it difficult to utilize ICT tools in their teaching and office work respectively. This finding is a negation of the objective of the ADAPTI programme which according to Adinde (2016) aims at equipping senior members of staff of tertiary institutions with ICT skills thus enabling them to translate the acquired knowledge and skills into improved teaching and work performance.

The second research question 2 tried to investigate the extent of commitment to the trainings by the trainees. The finding in this regard was that Staff of Colleges of Education displayed some level of commitment to the ADAPTI programme in the course of their training. This finding is backed up by the responses that the trainees were regular and punctual to classes, listened attentively in the course of lectures, participated in class activities, completed the assignments given to them, and stayed in the class as long as their lectures lasted without playing truancy. These actions are among the responsibilities of students that make for effective learning as noted by Burnaby Schools (2022) namely attending classes on time and regularly, completing all homework assignments, participating in classroom activity, contributing to discussions and group activities, listening carefully to teachers and parents, etc.

The test of the null hypothesis led to the finding that both the academic and non-academic staff agree to the fact that the duration of 5 days allotted to the programme impacted negatively on the effectiveness of the ADAPTI training. Specifically, the short period of 5 days used to run the ADAPTI course makes the facilitators rush their lectures with the effect that the trainees could not master well the topics treated and as such find it difficult to utilize ICT tools effectively in carrying out their office works and in teaching. This finding corroborates that of Bakare, Onah and Okereke (2018) who reported lack of skills and knowledge to operate e-teaching facilities and inadequate knowledge to prepare e-teaching lesson as some of the prominent barriers to effective utilization of e-teaching approach. It stands to reason therefore that the effective delivery of the ADAPTI programme demands an extension of its time duration.

The implication of the above findings is that the programme as is being presently run cannot sufficiently equip staff of colleges of education with the needed ICT skills to enhance their work performance.

Conclusion

A look at the content of ADAPTI shows that the programme is a well thought out intervention for building the ICT capacity of both academic and non-academic staff of tertiary institutions. The effectiveness of the programme has however been hampered by the short period of time devoted to running the programme which makes no room for the facilitators to teach for mastery. The implication of this is that the programme as is presently being implemented cannot equip the staff of colleges of education with ICT skills as well as enable them apply ICT tools and knowledge in teaching and in administrative duties respectively. This is irrespective of the commitment to the training displayed by both the academic and non-academic staff of the colleges.

Recommendation

The duration of the ADAPTI programme should be extended to at least one month of intensive lectures. This, it is believed will afford the facilitators enough time to teach thoroughly all the topics in the course content with emphasis on the application of ICT tools and knowledge in teaching and in administrative duties respectively.

References

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UNESCO. (2018). ICT competency framework for teachers. Retrieved from https://creativecommons.org/licences/by-sa/3.0/igo/…

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November 3, 2022
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Corporate Governance Structure and Organizational Competitiveness of Deposit Money Banks in Rivers State

Tags : Board Independence Board Size Corporate Governance Structure Organizational competitiveness

Category : Latest Publications

CORPORATE GOVERNANCE STRUCTURE AND ORGANIZATIONAL COMPETITIVENESS OF DEPOSIT MONEY BANKS IN RIVERS STATE

Ogie, Love Ibiobu (PhD)

Department of Accounting

Faculty of Business Studies

Ignatius Ajuru University of Education, Port Harcourt

manlovenig@yahoo.com

08033102319

Abstract

This study examined the relationship between corporate governance structure and organizational competitiveness of deposit money banks in Rivers state. A sample of 122 managers and supervisors were adopted as the sample size since the number is manageable and accessible to the researcher for the eleven deposit money banks in Rivers state. Three testable null hypotheses formulated, tested and rejected, and the alternate hypothesis accepted. Spearman’s Rank Order Correlation Coefficient was used to analyze association between the variables and the regression statistical tool was used to examine the causal effects of the dimensions of corporate governance structure on the criterion variable (organizational competitiveness). Hence, there is a significant relationship between corporate governance structure and organizational competitiveness of deposit money banks in Rivers state. It was thus recommended that the Management of deposit money banks should make policies that would enhance board independence of such firms as this would enhance organizational competitiveness. Deposit money banks should come up with policies that would predict accurate board size to enhance competitiveness of the organization. Deposit money banks should enact procedures that would enhance organizational competitiveness through an effective corporate governance structure.

Keywords: Corporate Governance Structure, Board Size, Board Independence, Organizational competitiveness

Introduction

The banking sector is essential to the functioning of the modern economy. Money, which is the circulatory system of every economy, passes through it like blood does a vein. Between the years 2017 and 2020, the Nigerian banking industry was responsible for contributing around N168.4 trillion to the country’s Gross Domestic Product (GDP). To be more precise, the sector’s contribution to the country’s GDP in 2017 was approximately N34.6 trillion, and it is projected to have contributed N37.8 trillion in 2018, N42.7 trillion in 2019, and N53.3 trillion in 2020 (Ailemen, 2022). Despite this seeming impressive contributions to the nation’s economy, banks in the sector are increasingly being bedeviled by some challenges, now exacerbated by the covid-19 crisis, such as revenue pressure and low profitability (low levels of interest rates and higher levels of capital), tighter regulation (after previous financial crisis), and especially, increasing competition from shadow banks and new digital entrants (Carletti et al., 2020).

Competition is a key factor that drives business concerns to either do well or fissile out of the business space. Consequently, meeting the expectations of firms, such as making consistent profits by satisfactorily resolving the inherent business uncertainties, rest on being competitive (Obuba & Omoankhanlen, 2022). Hence every business establishment even the deposit money banks in Rivers State tries to develop a competitive advantage over rival businesses in other to survive, gain and retain greater market share (Nwachukwu & Nwadighoha, 2021). Competitiveness has been described as an organization’s ability to build, maintain, use, and create new competitive advantages to outperform competitors in terms of productivity and quality, capture a substantial market share, and produce revenue and long-term growth (Tiran, 2022).

In their work, Adegbite and Nakajima (2011) suggested that the collapse of prominent multi-nationals like Enron Corporation and Worldcom, as well as Intercontinental Bank, Oceanic Bank, Spring Bank, Bank PHB, the bail out of Union Bank, and several mergers and outright take overs in the banking sector are specific instances of corporate governance structure failure in the banking sector in Nigeria. This tends to suggest that poor corporate governance structures contributed to their downfall, which heightened the interest in determining the best practices of corporate governance structure (Adegbite& Nakajima, 2011). Corporate governance is a set of principles that embraces both economic and social goals as well as between individual and communal goals so as to align the interests of various shareholders for the attainment of competitive advantage (Nginyo et al., 2018). Corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the corporation, such as the board, managers, shareholders and other interested parties, and details the rules and procedures for making decisions on corporate matter (Castrillón& Alfonso, 2021).

Certain factors tend to hinder the effectiveness of corporate governance structure from providing good leadership such as lack of board independence and size of the board of the organization (Nicholson, & Newton, 2010; Ogbechie, C. I. (2012). Within the corporate governance literature, the board is seen as a key player in governance of companies and as such there is the need for a better understanding of how this body works.

Several factors have been adduced by scholars as possible predictors of competitiveness such as: inventory management practice (Atnafu et al., 2018); process quality and quality control (Alzoubi, 2021); tacit knowledge strategies (Boma-Siaminabo, 2022); networking (Hettey et al., 2022); integration capability (Obuba & Omoankhanlen, 2022); sensing capability (Obuba & Alagah, 2022); corporate social responsibility (Melo et al., 2022); etc. Despite all of these studies, there appears to a dearth of studies that have empirically examined the nexus between corporate governance and competitiveness, especially of deposit money banks located in Rivers State. Consequently, this study is unique in its attempt to investigate the relationship between corporate governance and organizational competitiveness of deposit money banks in Rivers State.

Corporate Governance

Organizational Competitiveness

Board Independence

Board Size

Figure 1: A Model of the Relationship between Corporate Governance and Organizational Competitiveness, conceptualized by the researcher.

Research Hypotheses

In furtherance of the study, the following hypotheses were formulated:

Ho₁: There is no significant relationship between board independence and organizational competitiveness.

Ho₂: There is no significant relationship between board size and organizational competitiveness.

Literature Review

Theoretical Framework

The theoretical framework of this study is anchored on two theories namely: agency theory and stewardship theory.

Agency Theory

In 1976, Jensen and Meckling were the ones who initially put up the idea of agency theory, which has since contributed to the formation of more contemporary codes of practise in corporate governance. Managers and shareholders have different information needs, and this information gap is at the heart of agency theory. The notion, when applied to corporate governance, raises serious concerns for absent or uninvolved owners/shareholders who rely on the services of professional executives. These executives, in their agent capacities, are obligated to prioritise the interests of the company’s stockholders. However, in practise, they often behave in their own self-interests, calling for the establishment of a checking and balancing system to ensure that professional managers are held accountable (Waweru & Riro, 2013).

The separation of the chief executive officer and chairman of the board is a crucial agency monitoring technique (William et al., 2003). According to the research referenced by Adeusi (2013), when organisations have more agency difficulties, managers are able to generate personal gains that serve their own interests rather than those of the stakeholders, leading to bad performance. It is widely held that an effective governance structure is a crucial factor in reducing the prevalence of agency difficulties (Bino & Romar, 2010). Nonetheless, the assumptions of agency theory have had substantial impact on the development of new approaches to corporate governance. According to agency theory, incentives and self-interest are crucial to effective organisational decision making. Without wanting to admit it, agency theory shows how much of business is driven by greed.

Stewardship Theory

The concept of stewardship was first proposed by Donaldson and Davis in 1993. It presupposes that the interests of shareholders and management are aligned, and that management will be prompted to implement measures that reveal fundamental truths about the company’s health and performance. Further, this theory stresses the presence of a trustee who protects and enhances shareholder value through the firm’s behaviour resulting from performance (Subramanian, 2018). The steward’s usages obligations are enhanced by this action. They serve in a representational capacity, acting in the best interests of the shareholders. According to the stewardship theory, when the goals of the organization’s resources are met, the stewards are rewarded for their efforts. This research is grounded on this theory because of the importance of having a diverse board and a share of foreign ownership.

Conceptual Review

Corporate Governance Structure

Discussions about corporate governance typically centre around bridging the gap in interests between shareholders and management (Sarbah & Xiao, 2015). The understanding of how corporate governance affects a company’s management, strategies, and performance has been greatly expanded by the recent surge of interest in the field of corporate governance among academics and practitioners. It could be said that corporate governance is the means through which businesses are steered and managed (Astrachan, 2010). It focuses on setting up controls with the aim of reducing issues that can arise from competing interests among the firm’s various stakeholders (managers, shareholders, employees, creditors, etc.).

The term “corporate governance structure” is used to describe the organisational frameworks used by both public and private entities to establish and enforce ethical standards for conducting business. By maintaining the board’s autonomy, shareholders in a market economy can ensure that management is looking out for their best interests and acting accordingly.

Board Independence

The main argument supporting board independence is that the non-executive (or independent) members actively engage in board meetings, provide relevant and independent views on many issues and challenge important decisions of the executive board members (Fuzo et al., 2016). Many firms prefer to increase the proportion of outside directors rather than enlarging the board itself, reducing any costs related to the excessive number of directors and to avoid large dysfunctional boards since smaller boards are also related to faster decision making (Yermack, 1996). Moreover, the presence of independent directors supports the notion of equal treatment of shareholders, by curbing extraction of private benefits of control by affiliated directors and thus increasing firm value.

Accordingly, it provides reputational advantages for the firm, as it becomes associated with more professionalism and ethical conduct. Outside directors and their unbiased approach also effectively improve the monitoring abilities of the boards, decreasing any agency costs that might arise between shareholders and managers. By definition, the monitoring activities of the board must be improved in order to cover the disparity between management and various shareholders and can be achieved by the inclusion of independent directors (Lipinski, 2018).

As non-executive directors usually come from different backgrounds, the external connections and access to resources might be beneficial to the company. What is more, independent directors can play a role of a mentor for other directors, especially for young firms, which need specific expertise in various areas in order to grow, like in case of adequate strategic planning processes. Therefore, the presence of independent directors is an internal corporate governance mechanism.

Board Size

The number of board members is a significant aspect of the board of directors, and many businesses struggle to find the right number of directors to serve on the board (Graf & Stiglbauer, 2009). The term “board size” is used to describe the total number of directors on a company’s governing board. These directors may play a hands-on role in running the company or may act in a more passive, overseeing capacity (Kazan, 2022). The subject of what constitutes an optimal board size for a firm has persisted from a corporate governance standpoint, and numerous studies have examined the correlation between board size and company success (Bermig & Frick, 2010; Darmadi, 2011). Companies with both large and small boards have been studied, and the reasons for opting for either size have varied (Hidayat & Utama, 2016). Different perspectives on board size can be gleaned from the discussed theories of corporate governance. For instance, agency theory primarily argues that smaller boards are preferable to larger ones since an increase in board members generates an increase in agency costs and the efficiency of the board diminishes, ultimately resulting in bad business performance (Li et al., 2015). Boards with fewer members tend to have less information asymmetry and fewer disputes amongst members than those with more people (O’Connell & Cramer, 2010).

However, according to the resource dependence principle, a larger board means more resources for the business. It is hypothesised that when a board has more people with diverse backgrounds and experiences, it makes better decisions (Latif et al., 2013). Additionally, the key tenet of stewardship theory is that every manager or employer is a good steward of the company, with their interests aligned with those of the owners. This means that the number of board members will not affect the board’s dedication to the company or its professionalism. Companies already have a hard time deciding on a board size without the added complexity of conflicting notions from several ideologies.

There is no fixed number of people required or permitted by law or agreements to serve on the board of directors or management. When constructing a management board, the owners and supervisory board in charge often decide how many people will sit on the board. Therefore, it is dependent on the characteristics of the firm as well as the supervisory directors (Bermig & Frick, 2010).

Organizational Competitiveness

Organizational competitiveness is a concept that is usually not well-defined but persistently used by political class, economists, strategists, business firms and media. It has regained attention in today’s era of particularly in firms that makes practical efforts to return their level of productivity to a higher growth (Porter, 1990).

Organizational competitiveness in terms of interpretation implies that cost reduction is the only effective policy response. Firms losing competitiveness focus on how to reduce cost component, and extend to high energy in an attempt to compete favourably in the market. To some degree, this preoccupation with costs comes from the origin of the concept of competitiveness at certain level of the firm. However, even at this level, the theory of the firm and management theory emphasize that success of the corporate structure in place depends on competitive advantage and capabilities generated by innovation (Porter, 1990).

The role of productivity is sometimes emphasized to the extent that some authors consider productivity as the only meaningful concept of competitiveness (Kohler, 2006; Porter, 1990). Organizational competitiveness came to be seen as more than an accounting result comparing costs and revenues at one point in time. A broader interpretation of the term evaluates the sources of competitiveness of firms as well as their future prospects. This involves examining the processes that lead to a favourable cost or productivity position and the opportunities to sustain or improve it. Kohler (2006) noted that competitiveness in this sense is about processes and abilities. In the literature, terms like quality competitiveness or technological competitiveness are used to describe this broader interpretation, although both expressions could be seen as narrowly focusing on two specific aspects (quality and technology).

Corporate Governance Structure and Organizational Competitiveness

In reality, as argued by Bates (2013), corporate governance in its practical application is an important key, which unlocks the true value of a business regardless of the firm size. Willan et al. (2016), whose study revealed that organisations whether large or small have the same benefits, influences and challenges when it comes to the application of corporate governance, confirmed this. In other words, corporate governance can shift a firm from a survivalist entity incapable of growing past the abilities of its owners, to being an enterprise with factual and sustainable growth through improved competitiveness (Bates 2013).

For a firm to attain competitiveness in the market, it is essential that the firm first achieves a competitive advantage, which refers to the firm’s doing its activities better or differently from its competitors (Maniak, 2006). There are numerous ways to gain competitiveness obtainable for firms. This study describes corporate governance as one of the sources for firm competitive advantage. It contends that the adoption and effective compliance with corporate governance principles by business owners may create a distinctive capability for the organization, minimise the general costs of the business, enable them to acquire a competitive advantage over their competition and enhance their competitiveness.

Methodology

The study is descriptive in nature and employs the cross-sectional survey design. The sample element for the study comprises of one hundred and twenty two (122) managers and supervisors of various deposit money banks operating in the Rivers State. A census study was adopted given the manageable nature of the sample elements. A test-retest of the research instrument was conducted to ascertain the reliability of the instrument, and the outcomes met the Nunnally and Bernstein’s (1994) .07 minimum threshold. The Spearman Rank Order Correlation Coefficient was adopted to test the afore-stated null hypotheses.

Results and Data Analysis

Table 1: Spearman Correlation Coefficient (Spearman’s rho): Test of Association between the variables

Correlations
	Board Independence	Board Size	Organizational Competitiveness
Spearman’s rho	Board Independence	Correlation Coefficient	1.000	.926^**	.875^**
Sig. (2-tailed)	.	.000	.000
N	122	122	122
Board Size	Correlation Coefficient	.926^**	1.000	.949^**
Sig. (2-tailed)	.000	.	.000
N	122	122	122
Organizational Competitiveness	Correlation Coefficient	.875^**	.949^**	1.000
Sig. (2-tailed)	.000	.000	.
N	122	122	122
**. Correlation is significant at the 0.01 level (2-tailed).

Source: SPSS Output Version 20

The Spearman rank correlation table above measures the strength of association between the variables as follows:

The result reported a strong positive correlation between board independence and organizational competitiveness (rho = .875**, n = 122, p < 0.01), also a strong positive correlation value was reported between board size and organizational competitiveness (rho = .949**, n = 122, p < 0.01). Consequently, the afore-stated null hypotheses were rejected and their alternate accepted. To this end, the study empirically establishes that there is a significant positive association between board independence and organizational competitiveness; and there is also a significant positive relationship between board size and organizational competitiveness of deposit money banks in Rivers State.

Table 2: Model Summary of the Variables

Model Summary
Model	R	R Square	Adjusted R Square	Std. Error of the Estimate
1	.931^a	.868	.865	1.437
a. Predictors: (Constant), Board Size, Board Independence

Source: SPSS Output Version 20

From the model summary above, the R Square value of .931^a represents the correlation coefficient values of the variables which showed a high positive correlation among the variables; however the R square value of (86.8%) indicates the degree of change in the criterion variable (organizational competitiveness) as caused by the dimensions of corporate governance structure (board independence and board size).

Conclusion and Recommendation

Following the result of our findings – in line with literature; it was concluded that corporate governance structures with respect to board independence and board size, could significantly enhance the competitiveness of deposit money banks and boost high level performance and profitability. Consequently, it was recommended that the management of deposit money banks should:

Make policies that would enhance board independence as this would enhance organizational competitiveness.

Come up with policies that would predict accurate board size to enhance competitiveness of the organization.

Should enact procedures that would enhance organizational competitiveness through an effective corporate governance structure.

References

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November 1, 2022
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Prostate Cancer Screening in Nigerian Men: Perceived Barriers and Recommendations

Tags : Barriers digital rectal examination prostate cancer prostate specific antigen

Category : Latest Publications

PROSTATE CANCER SCREENING IN NIGERIAN MEN: PERCEIVED BARRIERS AND RECOMMENDATIONS

¹Mbah-Omeje K. N.; ²Iyke, C. A. and ³Amughe, S. C.

^1,3Department of Applied Microbiology and Brewing, Enugu State University of Science and Technology.

²Departmental of Biological Sciences, Akwa Ibom State Polytechnic, Ikot Osurua.

ABSTRACT
Prostate cancer has been described as the leading cause of cancer-related deaths among men aged 40 years and above, especially in developing countries including Nigeria. By 2030, the global burden of prostate cancer which is currently the fifth leading cause of death worldwide is expected to hit 1.7 million new cases and 499,000 new deaths. The exact causes of prostate cancer are unknown, it is thought that aging, family history, lifestyle, genome changes and race are among the significant risk factors. Routine screening for prostate cancer by prostate specific antigen and digital rectal examination can lead to early detection of the disease, thereby optimizing incidence, minimizing prevalence, and reducing the mortality rate. Studies have shown that Nigerian men are less likely to engage in screening practices due to fatalistic beliefs, lack of knowledge about prostate cancer and risk factors, misconception about screening, and no encouragement from the service provider among others. This review recommends the establishment and maintenance of institutional frameworks and policy guidelines that would create awareness programs on prostate cancer and the benefits of early screening for all men in Nigeria.

Key words: Barriers, digital rectal examination, prostate cancer, prostate specific antigen, screening.

INTRODUCTION
The prostate is a walnut-sized gland in the male reproductive system. It is situated beneath the bladder in front of the rectum and covers the upper part of the urethra (the tube that empties the bladder of urine). It supports bladder control and creates the seminal fluid that nourishes and transports sperm. Prostate adenocarcinoma (prostate cancer) is the most common type of non-skin melanoma among men globally (Tasian et al., 2012). When the ability to control cell growth or death is compromised in the prostate gland, a condition known as prostate cancer results. More than 99% of prostate cancers develop in the gland cell which is why it is called adenocarcinoma otherwise it is called sarcoma. As a result, abnormal cells concentrate around the prostate gland to form tumors (Kolade, 2017). The majority of prostate cancers grow slowly, while some grow relatively fast (Stewart and Wild, 2014; National Cancer Institute, 2015). Men under the age of 40 are rarely diagnosed with prostate cancer, and by the age of 50, it is usual for men to notice changes in the size and shape of the prostate cells (Cancer treatment centers of America [CTCA] n.d).
By 2030, the global burden of prostate cancer which is currently the fifth leading cause of death worldwide is expected to hit 1.7 million new cases and 499,000 new deaths (Center et al., 2012). However, this burden is not evenly distributed across the globe as black men have a higher incidence of prostate cancer, a more aggressive course, and a higher mortality rate when compared to white men. Despite extensive research, there is still no consensus regarding the causes of these discrepancies or the most effective ways to reduce them.
According to the International Agency for Research on Cancer (IARC), prostate cancer accounted for 29.1% of all male malignancies in Nigeria in 2018, with an age-standardized 1-year prevalence rate of 16.1, which is less than one-fourth of the rate in the United States. However, with 32.8 cases and 16.3 deaths per 100,000 men, prostate cancer is both the most prevalent and deadliest cancer in Nigerian men. 80% of Nigerians are thought to be incurable upon diagnosis, which, according to the report, is a death rate that is more than double that of North America.

Most men are unaware they have prostate cancer since it typically progresses slowly and they never experience any symptoms. In other men, however, prostate cancer can be fast growing and need treatment to prevent or delay spread outside of the gland. The main signs of prostate cancer are blood in urine, weak or decreased urine flow, increased urination frequency especially at night, the sensation that the bladder has not emptied, urinating with difficulty, incontinence, and urgency. Men who experience these symptoms might decide against seeing a doctor because they think the symptoms are a natural part of aging.
Although the exact causes of prostate cancer are unknown, it is thought that aging, family history, lifestyle (such as diet high in testosterone levels), environment, genome changes (such as changes in BRCA type 1 and 2, RB1, WT1, and other genes), and race (being black, for example) are among the significant risk factors (CTCA n.d; So et al., 2014; Jeihooni et al., 2015). As long as there is no local progression or metastasis to other parts of the body, prostate cancer typically doesn’t cause any symptoms (Madu and Lu, 2010), and by the time symptoms do appear, the disease has typically already progressed to its final stages. This is a major obstacle in the fight against the disease. According to research, early detection is a key factor in determining cancer’s prognosis, especially that of prostate cancer. Therefore, early disease detection through screening, which is the study’s main objective, can reduce the mortality rate of the condition in asymptomatic men and provide an opportunity for the use of efficient and affordable treatment options (Paiva et al., 2011; Conde et al., 2011, Smith et al., 2014). Factors that have been cited as screening barriers include negative beliefs; fears; and socioeconomic status, including limited education and anxiety. These circumstances have an impact on the men’s health and lives, as well as the children, families, communities, and the country as a whole. Specifically, this review’s objective is to investigate barriers to prostate cancer screening and recommendations on how to improve them in Nigeria.

PROSTATE CANCER SCREENING

Screening is the presumptive detection of unidentified diseases or defects through tests, examinations, or other procedures that can be applied rapidly (Agbo, 2016). Cancer screening implies searching for any cancer before the development of symptoms. The main reason for screening for cancer is to figure out if there is an abnormal growth, and if its growth may have a high risk of spreading if not handled effectively (Center for Disease Control and Prevention[CDC], 2022). The American Cancer Society (ACS) recommends that men should make an informed decision with their health care providers about whether to be screened for prostate cancer. Screening options for prostate cancer include a digital rectal exam (DRE) and the assessment of prostate-specific antigen (PSA) levels (Ezenwa et al., 2012).

The digital rectal exam involves healthcare personnel putting a lubricated gloved finger into a man’s rectum to check for any abnormality on the prostate that might be cancerous (CDC, 2022). According to Niang et al. (2011), DRE of the prostate gland is a reliable technique with a high predictive value for cancer screening. It is recommended to be carried out during annual physical examinations. Before the discovery of PSA in the mid-1980s, DRE was the first and only diagnostic technique used to diagnose prostate cancer. However, this test has considerable interexaminer variability and the majority of cancers detected using digital rectal examinations are at an advanced stage (Agbo, 2016).

PSA test which is the most commonly used screening method is a blood test that measures the level of PSA in the blood. PSA is a protein that is produced by cells in the prostate gland. It is mostly found in semen, although it is also present in the blood in trace amounts. Nanogram per millilitre of blood (ng/ml) is the general method for measuring the PSA level. There is no particular level of PSA that is stated to be normal. The reading differs for different men and the level usually increases as one gets older. In most cases, most men have a PSA level of less than 3ng/ml. The level of PSA can be higher in men with prostate cancer; they can also increase due to some other factors such as age and race (CDC, 2022). PSA levels can also be affected by certain medical procedures, some medications, enlarged prostate (benign prostatic hyperplasia), prostate infection (prostatitis) and there is the risk of false positives. Because many factors can affect PSA levels, a specialist is the best person to interpret the PSA test results.

Suspicion of prostate cancer due to abnormalities found on digital rectal examination (DRE) or by serum prostate-specific antigen (PSA) elevations often results in a recommendation for further tests (Shariat and Roehrborn, 2008). Such tests include; a magnetic resonance imaging (MRI) scan, Prostate Biopsy, CT scan, and bone scan. The progression of each test depends on the previous test (Cancer Research UK [CRU], 2022).

Magnetic resonance imaging (MRI) is a type of scan that uses a magnetic field, radiofrequency pulses, and a computer to produce detailed pictures of the body. Specialists use prostate MRI to evaluate the extent of prostate cancer and determine whether it has metastasized. They may also use it to help diagnose prostate infection or an enlarged prostate. Some examiners may use an endorectal coil, a thin wire covered with a latex balloon. The specialist inserts the coil a short distance into the rectum. Prostate MRI does not use radiation. It provides clearer and more detailed images than other imaging methods.

Multiparametric magnetic resonance imaging (Mp-MRI) commonly used for prostate cancer is an advanced form of imaging. It uses three MRI techniques namely T2-weighted, dynamic contrast-enhanced, and diffusion-weighted MRI. It uses these techniques to provide anatomical pictures and information on the function of the prostate gland. Mp-MRI assesses water molecule motion (called water diffusion) and blood flow (called perfusion imaging) within the prostate (Taneja, 2004). This helps the doctor to tell the difference between diseased and normal prostate tissue. Mp-MRI helps differentiate between low-risk/slow-growing and high-risk/aggressive prostate cancers. It also helps ascertain if cancer has spread beyond the prostate level. The result only does not mean that prostate cancer has been confirmed but it is likely present. Not all cancers are seen in the Mp-MRI scan, so a further test is required which is biopsies (Murphy et al., 2013).

Biopsy of prostate cancer involves taking out a tissue from the prostrate and viewing the sample under the microscope to check for cancer. There are two major methods, which include; transrectal ultrasound scan (TRUS) guided biopsy and transperineal biopsy. The most presently valid method of biopsy to ensure accurate sampling of prostate tissue in men with a high risk of prostate cancer is the Transrectal ultrasound (TRUS)-guided, systematic needle biopsy (Shariat and Roehrborn, 2008).

When a biopsy is completed and it is confirmed that there is a cancer cell in the prostate, the patient will then be taken for further tests called staging in cancer. This test is carried out to determine the extent of the disease, that is; the exact location, if it has spread to other parts of the body and how big the tumor is. Computed Tomography (CT) scans and bone tests are the tests usually carried out during the staging period. CT scan uses an x-ray and a computer to create a comprehensive image of the body to show if cancer has spread in the body. CT scans are the fastest and uses cheaper hardware, so it is affordable to use but has high radiation dose which may lead to adverse effect if used for a long time (Korevaar et al., 2021). The bone scan is used to detect any changes or abnormalities in the bone, and to know if cancer has spread to the bone (Formenti et al., 2021). The results of various screening tests will help to know the right treatment method to initiate.

PERCEIVED BARRIERS

Perceived barriers refer to the negative effects of health-promoting behavior (Champion, 1999). Perceived barriers are elements that prevent someone from engaging in behaviors as a result of their beliefs about illness and disease. The methods through which barriers hinder prostate cancer screening have been studied by various researchers. According to Mutua et al. (2012), PCA screening hurdles include fatalistic beliefs, lack of knowledge about prostate cancer and risk factors, fear of screening being uncomfortable and family influence. Again, Kolade (2017) investigated how 130 Nigerian male workers aged 40-65 years regarded prostate cancer screening and discovered that a low level of knowledge about prostate cancer, misconception towards prostate cancer screening, and no encouragement from the service provider are the perceived barriers. Also, Oranusi et al. (2012) in a cross-sectional study conducted on 652 men aged 20–69 noted that the absence of a national cancer center, credibility of health promotion campaigns, fear of being diagnosed with cancer, and no national policies on prostate cancer screening is associated with barriers to screening, whereas Awosan et al. (2018) cited lack of knowledge about cancer of the prostate, lack of knowledge about prostate-specific antigen screening, cost of screening and no health insurance cover as significant barriers to screening among 300 men aged 40–84 years from Sokoto, Nigeria. Oladimeji et al. (2010) identified barriers in a different study as limited knowledge about prostate cancer and lack of awareness of screening tests.

A growing body of literature suggests that, even among immigrants, barriers can deter individuals from getting screened for the disease (Akpuaka et al.,2013; Boyd et al.,2001). For example, (Akpuaka et al., 2013) conducted a study of 22 Nigerian male immigrants to the United States to explore their barriers and beliefs towards PCA screening of Nigerian male immigrants residing in the Washington DC metropolitan area. Participants cited embarrassment, masculinity, and lack of information as barriers to screening for PCA, and the authors concluded that cultural beliefs, lack of health insurance, and social norms might have influenced participants’ decisions about PCA screening.

The majority of the studies revealed that a low level of knowledge hinders Nigerian men from screening for prostate cancer. The lack of knowledge ranges from not knowing anything about prostate cancer (Awosan et al., 2018; Mutua et al., 2017), lack of knowledge about the existing screening methods and campaigns (Awosan et al., 2018; Kolade, 2017), and lack of knowledge about the existence of prostate cancer screening facilities (Oladimeji et al., 2010).

RECOMMENDATION
This review has shown that there is a low level of prostate cancer awareness among Nigerian men. There should be creation of information leaflets containing short information on the common disease, advantages of early screening in different language and distributed to both the urban and rural part of the country (Ogundele and Ikuerowo, 2015). The media authority should make sure that the right information about prostate cancer, risk factors, screening and treatment are being shared so as to remove the false believe among Nigerian men and help them with necessary information to seek for help when there is need to. Health workers should organize seminars and workshops to enlighten most people about the prostate cancer and the benefits of early screening (Ogundele and Ikuerowo, 2015). Intervention measures aiming at increasing knowledge about prostate cancer and screening services need to be scaled up alongside ensuring that screening services are freely available for easy access among individual both in rural and urban area (Fidelis et al., 2019).

The major factor in the changing prevalence of prostate cancer is the effect of screening. Nigeria screening program is underdeveloped which has led to the low outcome of screening process (Ogunbiyi and Shittu, 1999). The right resources should be channeled to the health sector to improve the efficiency of the screening program in Nigeria. The cost of screening should be reduced to make it more affordable for people on low incomes.

There is need for Nigeria government to promote prostate awareness and screening. This will reduce mortality rate and in turn improve the economy of the country.

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Effect of Family Ownership on Dividend per Share of Conglomerate Firms in Nigeria

Tags : Dividend per share Family ownership Firm size

Category : Latest Publications

EFFECT OF FAMILY OWNERSHIP ON DIVIDEND PER SHARE OF CONGLOMERATE FIRMS IN NIGERIA

Oranefo, Patricia C.

Department of Accountancy

Nnamdi Azikiwe University, Awka

Mail: rollandchi@yahoo.com

Abstract

The study determined the effect of family ownership on dividend per share of Conglomerate firms in Nigeria. Ex Post Facto research design was adopted. The population of the study consists of the seven Conglomerate firms quoted on the Nigerian Stock Exchange. The study covered nine years annual reports and accounts of these firms from 2012 to 2020.Using regression analysis, the result stated that family ownership has a negative significant effect on dividend per share of quoted Conglomerate firms. According to the study, companies may adjust dividend payouts in response to a country’s economic climate, highlighting the controlling shareholders’ motivation.

Keywords: Family ownership, Dividend per share and Firm size

INTRODUCTION

One of the significant issues lately following monetary huge outrages in corporate-level is corporate administration for specialists and financial backers. According to Mahdi and Alireza (2017), it addresses the necessity of keeping an eye on the management of the company, separating the economic entity from its ownership, and ultimately safeguarding the rights of investors and stakeholders. On the other hand, the dividend payout policy has sparked numerous accounting and finance studies.

According to Al-Gharaibeh, Ziad, and Al-Harahsheh (2013), dividend policy and ownership structure have been the subject of extensive research worldwide and have been a source of concern for other stakeholders other than management. Other stakeholders, such as customers, shareholders, and employers (Obaidat, 2018;) are of the opinion that management smoothed dividends for personal gain (2013, Al-Nawaiseh). In a similar vein, they are of the opinion that management possesses first-hand information, which entitles them to manipulate the situation to their own advantage (Arshad, Akram, Amjad, & Usman, 2013; Famous and Elijah, 2019).

In the field of corporate finance and financial economies, dividend policy is one of the most striking and contentious topics. As remuneration for supporting the business’s inherent risks, the dividend is paid to equity shareholders in exchange for their investment. The decision about how much of the company’s earnings will be distributed to shareholders as dividends at the end of each year are critical for the company’s management. The dividend, according to Hanady (2020), is the shareholders’ compensation for their investments, and they want to maximize their wealth and earn extremely high returns. However, in order to finance its long-term expansion, the business must retain profits. As a result, the dividend policy is a sensitive issue, and management must be extremely vigilant about its profit-sharing policies and dividend distribution amounts to maintain shareholders’ trust and finance the company’s expansion and growth (Hanady, 2020).

The shareholders of a typical publicly traded company are quite diverse, and each shareholder may have distinct goals regarding their stake in the corporation’s capital. In Nigeria, the connection between dividend policy and ownership structure has been the subject of debate (Mukhtar).2015, Dandago, Farouk, & Muhibudeen, 2015), and the results have been as varied as the amount of attention paid to the problem.

Both Anton’s (2016) research in Romania and Subramanian’s (2018) research in Malaysia came to the conclusion that management has the potential to raise the value of a company. Senata’s (2016) research in Indonesia demonstrated that investors received a signal about the company’s prospects for future growth when dividends were increased. In the meantime, Marangu and Jagongo (2015) in Kenya demonstrated that the profit strategy got adverse consequences on the firm worth. In addition, Gharaibeh and Qader (2017) in Saudi Arabia came to the conclusion that the dividend policy was not the primary factor that contributed to the value of the company.

In the past, the results of some studies have been inconsistent. It was thought that the concentration of ownership could be affected by other factors. According to Zhang, Edwards, and Capulong (2000), the majority of ownership shares were concentrated in Asian nations, including Indonesia. The potential of shareholders in charge of running the business has been demonstrated by the structure of centralized ownership (Prencipe, Bar-Yosef, & Dekker, 2014). As a result, the majority owner would have the opportunity to stifle the minority owner’s rights because there would be a conflict of interest between the majority and minority shareholders (Mitton, 2002). Additionally, more attention should be paid to the fact that some of the investigated factors resulted in ambiguous and inconsistent findings. The ownership structure was one of the aforementioned factors that were very important. The study is to determine the effect of family ownership on dividend per shareof Conglomerate firms in Nigeria.

REVIEW OF RELATED LITEATURE

Dividend Policy

A company’s dividend policy is one of the most important decisions managers make regarding how much of a company’s earnings should be given to shareholders as dividends and how much should be kept for the company’s growth. It likewise remembers choice of the chiefs for whether to deliver profit or hold income, by taking into account its income, benefit and business valuable open doors (Ibrahim and Shuaibu, 2016). The dividend payment is regarded as relevant due to its informational value. Additionally, it is believed that the informational content of dividend payments can have a significant impact on shareholders and potential investors; and the company’s stock market share price will be affected as a result (Adesola & Okwong, 2009).

According to Glen et al. 1995, managers’ dividend policies serve the interests of investors in every nation. Dividends may be paid out or retained for the company’s use, depending on the investor’s preference. Proprietorship structure is one of the significant factors which impact the profit payout approaches; despite the fact that the relationship varies depending on the class and level of owners. According to Kumar (2003), ownership structure has different effects on dividend payment. Managers believe that foreign investors are more concerned with dividends than local and institutional investors are with growth and the retention of earnings for future investments.

The dividend policy that maximizes the firm’s value is said to be the best dividend policy for increasing the company’s value. As a result, dividend policy has been viewed as an intriguing problem in a company to replace large ownership as monitoring tools. It is one of the central mechanisms of firm strategies. Additionally, larger investors may be able to divert corporate resources for personal gain through their influence. Companies that develop agency conflict may have their dividend payments restricted as a result of this. As a result, in order to gain a deeper comprehension of corporate dividend decisions, it is essential to investigate the relationship between dividend policy and larger shareholders (Jensen, 1986). As a result, dividend policy is a powerful instrument for managing and reducing conflicts of interest between managers and investors. Managers favor retained earnings, while investors are interested in dividends. According to Stouraitis and Wu (2004), corporations’ excess investment issues could be reduced by using the dividend. One of the fundamental components of corporate policies is decisions regarding dividends (Kouki and Guizani, 2009). As a consequence of this, the dividend policy will both contribute to the reduction of agency costs and act as a signal to inform investors about the company’s circumstances.

Family ownership and dividend policy

Due to the high concentration of ownership, family-owned businesses play a significant role in the majority of emerging market economies (Rajverma, Arrawatia, Misra, Chandra, & McMillan, 2019). It is well known that prior research on dividend policy and family businesses primarily relied on agency theory; According to Charitou, Louca, and Tsalavoutas (2016), a number of studies, agency theory has a mixed perspective on agency issues in family businesses, (Villalonga and Amit. 2006). There are two kinds of organization issues. First, the conflict between principals and agents—also known as the agency problem—occurs when the principals’ (family shareholders) interests do not align with the agents’ (managers’) interests in the company. As a result, family shareholders can keep an eye on managers to prevent problems at the company by having members of their own families appointed to top management and board positions (González, Guzmán, Pombo, & Trujillo, 2014; Setia-Atmaja, 2017). Second, an agency problem of type II: a conflict of interest between minority and controlling shareholders. The excessive control rights of the controlling family shareholders may cause this agency conflict. However, the divergence of interests that exists between minority and controlling shareholders may cause controlling shareholders to abuse their power and control in order to obtain personal benefits, such as elevating their own salaries and appointing members of their families to high-ranking managerial positions and board seats despite the fact that they are incapable of doing so. Therefore, rather than enhancing the shareholders’ overall wealth, this may result in an increase in expropriation costs for minority shareholders (Xu’nan, 2011; Young, Peng, Ahlstrom, Bruton, and Jiang, 2008).

The majority of recent studies reported a significant positive association between family ownership and dividend payouts (Adjaoud & Hermassi, 2017; Adjaoud & Hermassi, 2017; Adjaoud & Hermassi, 2017; Adjaoud & Hermassi, 2017; Adjaoud & Hermassi, 2017; Adja, Setia-Atmaja, 2010; Subramaniam, 2018). Three perspectives were revealed in their findings to support this positive correlation. The first view of dividend is one based on reputation, which states that controlling family shareholders may have a tendency to build a good reputation for treating minority shareholders well by paying them high dividend payouts to keep them happy. When a family business plans to increase its capital in the near future, reputation is especially important (Benjamin, Wasiuzzaman, Mokhtarinia, & Nejad, 2016; (Subramaniam, 2018). According to La Porta, Lopez-de-Silanes, Shleifer, & Vishny (2000), the second viewpoint is the widely accepted explanation that a policy of increasing dividend payouts can serve as a corporate governance mechanism for resolving agency conflicts (both Type 1 and Type 2) by decreasing the amount of cash that is available at the discretion of managers (Jensen, 1986) and controlling the discretion of shareholders in family businesses. The third and final perspective demonstrated that dividends are a source of income for family shareholders, and as a result, family businesses may also pay high dividends to satisfy shareholders’ income requirements (Isakov & Weisskopf, 2014; Setia-Atmaja, 2017; Subramaniam, 2018). However, contrary to the previous argument, other studies (Villalonga & Amit, 2006) suggested that, in comparison to non-family businesses, family businesses tend to distribute dividends less frequently and pay out fewer cash dividends As a result of their preference for controlling resources and reaping some benefits from them at the expense of minority shareholders, family businesses typically pay lower dividends (Rajverma, 2019).

Firm size

Firm size, according to Hirschinis (2019), is a significant factor in a company’s profits. The company’s asset ownership indicates whether it is a large or small business. In most cases, total assets are used to determine a company’s size. Firm size and performance have been the subject of a variety of studies, with varying degrees of support for and opposition to a positive relationship. According to Aduralere and Opeyemi (2019), every study conducted in Nigeria demonstrated a positive correlation between a company’s performance and its size. However, other studies demonstrated a weak or negative correlation between firm performance and size. Using a sample of 782 Slovenian fast-growing companies, for instance, Monik & Irec (2015) and Banchuenvijit & Pariyanont (2012) shed light on factors like firm size that determine the profitability of a developing company. The findings revealed a negative relationship between firm company profitability.

Elijah and Famous (2019) investigated the connection between Nigeria’s dividend policy and ownership structure. The following variables of ownership structure were examined: Institutional ownership, foreign ownership, and managerial ownership. The study used a longitudinal research design because it looked at dividend policy across time and across a cross section. Secondary data used in the study were retrieved from the audited financial statements of various quoted companies from 2009 to 2016. The study used the simple random sampling technique to select a sample size of 70 companies. Managerial ownership (MOWN), institutional ownership (IOWN), and foreign ownership (FOWN) all have a significant impact on dividend policy, according to the study’s findings. The dividend adjustment models show that earnings changes strongly moderate the effect of ownership structure variables on dividend payout, especially in the full adjustment model. Ajadi, Bakare, and Mohammed (2018) looked at how the ownership structure of listed insurance companies in Nigeria affected their dividend policies. Management and institutional ownership served as proxies for the structure of ownership. Secondary data from audited financial reports of twenty-six (26) insurance companies that are listed on the Nigerian Stock Exchange (NSE) and have their annual financial reports available from 2013 to 2017 are used in this study. For the analysis, the study used the results of fixed effect panel regression. The analysis showed that managerial ownership has a big impact on dividend policy, while institutional ownership only has a small, negative impact. Ibrahim and Shuaibu (2016) conducted research on the Dividend Policy and Ownership Structure of Listed Deposit Money Banks in Nigeria from 2010 to 2014. Managerial ownership, institutional ownership, ownership concentration, and foreign ownership served as proxies for the independent variable, while the dividend payout ratio served as a proximate for the dependent variable (dividend policy).As a method of data analysis, panel data Tobit regression was used to analyze the data. The dividend policy of Nigerian deposit money banks was found to have a negative and significant relationship with managerial ownership. Nuraddeen and Hasnah (2015) researched the effect of proprietorship structure on profit strategy of recorded combinations firms in Nigeria for the period 2001-2010. The study found that managerial ownership and the dividend policy of Nigerian listed conglomerates are negatively correlated. However, due to the time period examined, the study cannot be applied to current events. Adeiza, Kabiru, and Muhibudeen (2015) looked at how corporate shareholding structure affected the dividend payout ratio of chemical and paint companies that were listed on the Nigerian stock exchange between 2008 and 2013.In the study, each of the eight businesses was used. Corporate shareholdings were represented by managerial, institutional, block, and foreign shareholdings, and dividend payout ratio was represented by dividends to net income for the same time period. Corporate shareholdings Structure was represented by dividend payout ratio. The multiple regression method was used in the study. The results showed that listed Nigerian Chemical and Paints Companies’ dividend payout ratios have been negatively, strongly, and significantly impacted by managerial shareholdings. Using a regression discontinuity design, Crane, Michenaud, and Weston (2014) investigated the impact of institutional ownership on payout policy. They demonstrate that businesses increase their dividend payments and share repurchases when they have more institutional ownership. The annual composition of the Russell 1,000 and 2,000 indices serves as the basis for their identification strategy, which relies on a discontinuity in ownership. Additionally, they discover evidence of a causal effect on equity issuance, corporate investment, R&D, and proxy voting. The findings, taken as a whole, lend credence to agency models in which concentrated ownership reduces the marginal cost of delegated monitoring. The effect of incentive regulation on the dividend policy of regulated electricity companies was investigated by Bremberger, Cambini, Gugler, and Rondi (2013). They make a connection between the implementation of a new regulatory mechanism (rate of return vs. incentive regulation) and dividend pay-out and smoothing ratios using a panel of 106 publicly traded European electric utilities from 1986 to 2011.Their findings demonstrate that electric utilities subject to incentive regulation not only have higher target payout ratios but also smooth their dividends less smoothly than businesses subject to ROR regulation; As a result, firms adopt dividend policies that are more in line with efficiency-enhancing pressures and more responsive to earnings variability as a result of incentive regulation. This suggests that managers are more likely to cut dividends when necessary when they are more sensitive to competition-like efficiency pressures following the implementation of incentive regulation. Al-Gharaibeh, Ziad, and Al-Harahsheh (2013) looked at how ownership structure affected dividend policies in Jordanian businesses between 2005 and 2010.A sample of 35 companies that were listed on the Amman Stock Exchange during that time were used. The study used two distinct models for its methodology: the partial adjustment model and the full adjustment model. They found that the full adjustment model was superior to the partial model, which only explained 20.65% of the variation in dividend policy, because it explained 61.5 percent of the variation. The study’s conclusion was that managerial ownership has a negative partial adjustment coefficient.

METHODOLOGY

Research Design

The Ex-Post Facto research design was adopted for the study. This is appropriate because the study aims at measuring the relationship between one variable and another, in which the variables involved are not manipulated by the researcher.

Population of the Study

The population of the study consists of the seven Conglomerate firms quoted on the Nigerian Stock Exchange. The study covered nine years annual reports and accounts of these firms from 2012 to 2020.

Data Collection

Data were collected from only secondary sources. The data were sourced from publications of the Nigerian Stock Exchange Factbook and the Annual Reports and Accounts of the sampled firms from 2012 to 2020. The dependent variable is proxied using dividend per share, while the independent variables are family ownership and audit firm size.

Model Specification

In specifying the model for the study, the researcher modified the econometrics model of Bamigboye and Akinadewo (2020), as represented dividend payout policy as dependent on the ownership structure. Hence it was given as

Y = α + β1X1 …..+ βnXn + ε ………,……………………….….………….i

Y = value of dependent variable

α = constant term i.e. the intercept of the equation

β = slope of the equation i.e. regression coefficient.

X = value of the independent and control variable.

ε = error term.

Hence the regression equation became:

DPS= α0 + β₁MAO + β₂FMS + ε ………………………………………….ii

Where

DPS is the dividend per share

MAO is the managerial ownership

FMS is the firm size

The researcher modified the model in the following form:

DVP_ίt =β₀ + β₁FMO_ίt + β₂FMS_ίt + µ_ίt

Where:

β₀ = Constant term (intercept)

β_ίt = Coefficients to be estimated for firm ί in period t

µ_ίt = Error term/Stochastic term for firm ί in period t

DP_ίt = Dividend policy of firm ί in period t

FMO_ίt = Family ownership of firm ί in period t

FMS_ίt = Firm size of firm ί in period t

et = Error term.

Method of Data Analysis

Regression analysis will be used to test the relationship between the independent variables and the dependent variable. This will be done with aid of e-view version 9.0 at 95% confidence at five degree of freedom (df).

Decision Rule

Reject H_o if the P-value of the test is less than α-value (level of significance) at 5%, otherwise accept H_I.

DATA ANALYSIS AND RESULTS

Table 1: Descriptive Statistics

	DPS	FMO	FMS
Mean	0.355556	68.51556	4.07E+09
Median	0.290000	69.08000	3.48E+09
Maximum	0.650000	74.97000	8.68E+09
Minimum	0.100000	61.92000	1.75E+09
Std. Dev.	0.172490	6.528432	2.46E+09
Skewness	0.285272	-0.034269	0.829749
Kurtosis	2.087335	1.123431	2.374386
Jarque-Bera	0.434429	1.322328	1.179496
Probability	0.804757	0.516250	0.554467
Sum	3.200000	616.6400	3.66E+10
Sum Sq. Dev.	0.238022	340.9634	4.83E+19
Observations	9	9	9

Table 1 shows the mean (average) for each of the variables, their maximum values, minimum values, standard deviation and Jarque-Bera (JB) Statistics (normality test). The results in table 1 provided some insight into the nature of the selected Nigerian quoted companies that were used in this study.

Firstly, it was observed that on the average over the nine (9) years (2012-2020), the sampled quoted companies family ownership (FMO) in Nigeria were characterized by negative effects. While firm size characterized with positive effect.

The Jarque-Bera (JB) which test for normality or the existence of outliers or extreme values among the variables shows that most of the variables are normally distributed at 5% level of significance. This means that any variables with outlier are not likely to distort our conclusion and are therefore reliable for drawing generalization.

Test of Hypothesis

Ho: Family ownership has a significant effect on dividend per share of Conglomerate firms.

Table 2: Regression analysis of FMO, FMS and DPS

Dependent Variable: DPS
Method: Least Squares
Date: 10/28/22 Time: 23:22
Sample: 1 72
Included observations: 72


Variable	Coefficient	Std. Error	t-Statistic	Prob.


C	2.907975	1.243861	2.337862	0.0223
FMO	-2.583719	1.306924	-1.976947	0.0520
FMS	1.16E-10	2.76E-10	0.420478	0.6754


R-squared	0.057838	Mean dependent var	2.073333
Adjusted R-squared	0.030529	S.D. dependent var	5.595639
S.E. of regression	5.509563	Akaike info criterion	6.291621
Sum squared resid	2094.514	Schwarz criterion	6.386482
Log likelihood	-223.4984	Hannan-Quinn criter.	6.329386
F-statistic	2.117909	Durbin-Watson stat	0.723311
Prob(F-statistic)	0.128036

In Table 2, R-squared and adjusted Squared values were (0.059) and (0.031) respectively. This indicates that the independent variable jointly explain about 3% of the systematic variations in dividend per share (DPS) of our sampled companies over the nine years period (2012-2020). The F-statistics (2.117) and its P-value of FMO and FMS are 0.052 and 0.675 respectively; show that the family ownership (FMO) regression model is well specified.

Using Durbin-Waston (DW) statistics which we obtained from our regression result in table 2, it is observed that DW statistics is 0.723 and an Akika Info Criterion and Schwarz Criterion which are 6.292 and 6.386 respectively also further confirmed that our model is well specified. In addition to the above, the specific finding from the explanatory variable is provided below.

Based on the coefficient of -2.583719 and p-value of 0.05, was found to have a negative and significant effect on dividend per shares of sampled quoted firms This result, therefore suggests that we should accept our alternate hypothesis which stated that family ownership has a significant effect on dividend per share of quoted Conglomerate firms.

Conclusion

The study determined the effect of family ownership on dividend per share of Conglomerate firms in Nigeria. The population of the study consists of the seven Conglomerate firms quoted on the Nigerian Stock Exchange. The study covered nine years annual reports and accounts of these firms from 2012 to 2020.Using regression analysis, the result stated that family ownership has a negative significant effect on dividend per share of quoted Conglomerate firms. The result shows that a decrease in family ownership leads to decreases in dividend per share.

This result is in line with Villalonga and Amit (2006) that comparison to non-family businesses, family businesses tend to distribute dividends less frequently and pay out fewer cash dividends. Family businesses typically pay lower dividends due to their preference for controlling resources and gaining some benefits from them at the expense of minority shareholders. According to the study, companies may adjust dividend payouts in response to a country’s economic climate, highlighting the controlling shareholders’ motivation.

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October 31, 2022
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rTMS in Child and Adolescent Psychiatry: A Literature Review

Tags : adolescent child neurostimulation noninvasive rTMS

Category : Latest Publications

rTMS in Child and Adolescent Psychiatry: A Literature Review.

H. BELHADGA, Z. MAATAOUI AND H. KISRA

Ar-Razi University Psychiatric Hospital, Salé.

Faculty of Medicine and Pharmacy.

Mohammed V University of Rabat- Morocco.

Abstract:

Transcranial magnetic stimulation (TMS) is an emerging neuropsychiatric tool with therapeutic and research applications. The three most common types of TMS delivery include single-pulse, paired-pulse, and repetitive transcranial magnetic stimulation (rTMS).

The largest trial to date was a multicenter, doubleblind, sham-controlled trial of 301 subjects with MDD which involved high frequency stimulation of the LDLPFC, five times per week at 120% motor threshold for 4 to 6 weeks. In 2008, this culminated in US Food and Drug Administration (FDA) clearance for rTMS treatment of adults with MDD who have failed one previous medication trial of an adequate dose and duration. Previously, rTMS has been approved for treatment refractory depression in other countries such as Israel and Canada.

Keywords: rTMS, noninvasive, neurostimulation, child, adolescent.

Introduction:

Transcranial magnetic stimulation (TMS) is an emerging neuropsychiatric tool with therapeutic and research applications. Dr. Anthony Barker and his associates first developed transmagnetic stimulation (TMS) in 1985 when they observed movement in the right hand upon holding a conducting coil to the scalp above the left cerebral motor strip [1]. This involves the non-invasive stimulation of cortical neurons by means of a rapidly changing magnetic field which induces weak electric currents in the brain [2].

The three most common types of TMS delivery include single-pulse, paired-pulse, and repetitive transcranial magnetic stimulation (rTMS).

Overall, TMS is considered safe with the most serious risk involving the accidental induction of seizures. With proper safety precautions the risk of seizure from rTMS and TMS is low (0.1 – 0.6%). Other potential risks include syncope, scalp discomfort, and changes in auditory thresholds.

Despite promising potential in the diagnosis, examination, and treatment of psychiatric disorders in adults, this technology has had somewhat limited use in children and adolescents thus far.

Methods:

The purpose of this paper is to present an overview of rTMS research in child and adolescent psychiatry. Literature was reviewed and collected with Sciencedirect, CAIRN, Google Scholar, NCBI and PubMed searches. Search terms included adolescent (including psychiatry and psychology), anxiety disorder, attention deficit hyperactivity disorder, autism spectrum disorder, bipolar disorder, child (including psychiatry and psychology) major depressive disorder, mood disorder, schizophrenia, Tourette’ s syndrome, transcranial magnetic stimulation. Articles describing the delivery of rTMS in children and adolescents were included.

Therapeutic rTMS in child and adolescent psychiatry :

Repetitive transcranial magnetic stimulation (rTMS) is a non-invasive brain stimulation tool with potential for broad application in individuals with neuropsychiatric conditions. As in adults, most rTMS research in youth has focused on treatment-resistant depression. A limited number of rTMS studies have also been conducted in children and youth with primary diagnoses of Autism Spectrum Disorder (ASD), Attention-Deficit/Hyperactivity Disorder (ADHD) or Tourette’s syndrome. Across the available rTMS literature, rTMS appears to be well tolerated with few adverse effects reported when applied to child and youth research samples. However, the potential efficacy of rTMS treatment for a variety of targets in children and youth remains unclear, due in part to limitations of the current literature, including studies using diverse protocols, potential for bias in existing clinical trial designs, variability in the research samples, and the use of heterogenous outcome measures. While rTMS is unlikely to take the place of more accessible treatments (e.g., psychopharmacological, psychosocial, psychotherapeutic), rTMS may provide a valuable alternative treatment option, particularly for those individuals where conventional treatments are inaccessible, poorly tolerated, or ineffective. A more robust body of well-designed, controlled trials, is needed in order to clarify rTMS treatment efficacy across relevant neuropsychiatric conditions, optimize treatment protocols, and meet the critical need for novel mental health interventions in children and youth[3].

In children and adolescents with autism spectrum disorder:

The term autism spectrum disorder (ASD) describes a range of conditions characterized by impairments in social interactions, communication, and by restricted and repetitive behaviors. Autism spectrum disorder may also present with symptoms suggestive of autonomic nervous system (ANS) dysfunction. A study which has the objective to determine the effect of 18 sessions of low frequency (LF) repetitive transcranial magnetic stimulation (rTMS) on autonomic function in children with ASD by recording electrocardiogram (ECG) and electrodermal activity (EDA) pre- post- and during each rTMS session is realised by M.F. Casanova et al. (USA; 2014). Behavioral evaluations post-18 TMS showed decreased irritability, hyperactivity, stereotype behavior and compulsive behavior ratings while autonomic measures indicated a significant increase in cardiac interval variability and a decrease of tonic SCL. The results suggest that 18 sessions of LF rTMS in ASD results in increased cardiac vagal control and reduced sympathetic arousal[4].

In a Short-Term Study on Non-Invasive Brain Stimulation for Children with Autism Spectrum Disorders. Twenty-four patients with ASD (mean age: 12.2 years) received 20 sessions of rTMS over the left dorsolateral prefrontal cortex. The total score on the Autism Behavior Checklist, Autism Treatment Evaluation Checklist, and the Autism Diagnostic Interview were used to determine the short-term outcome. A significant reduction in the total score on the three clinical scales was observed and maintained during the first six months after treatment, with a slight and non-significant tendency to increase the scores in the last evaluation. Twenty sessions of NIBS over the L-DLPFC improves autistic symptoms in ASD children, with a lasting effect of six months[5].

In the systematic review of MASUDA and al. examined literature on repetitive transcranial magnetic stimulation for children and adolescents with neurodevelopmental disorders published up to 2018, confirmed that No severe adverse effects were reported and that In patients with autism spectrum disorder, low-frequency repetitive transcranial magnetic stimulation and intermittent theta burst stimulation applied to the dorsolateral prefrontal cortex may have therapeutic effects on social functioning and repetitive behaviors[6].

Meta-analyses of Barahona and al. showed a significant, but moderate, effect on repetitive and stereotyped behaviors, social behavior, and number of errors in executive function tasks, but not other outcomes. Most integrated studies had a moderate to high risk of bias, mostly due to lack of subject- and evaluator-blinding to treatment allocation. Only 5 studies reported stability of these gains for periods of up 6 months, with descriptions that improvements were sustained over time[7].

In A 4-week randomized blinded controlled trial followed by another 4-week open-label intervention, in a hitherto, largest sample of intellectually able children with autism realised on 78 patients. Continuous 8-week intermittent theta burst stimulation on the bilateral posterior superior temporal sulcus in children with autism is safe and tolerable, and it produced greater therapeutic efficacy, although, there is no significant effects of 4-week intermittent theta burst stimulation on core symptoms and social cognitive performances in autism. Further analysis revealed that participants with higher intelligence and better social cognitive performance, alongside less attention-deficit hyperactivity disorder severity at baseline, were more likely to be responders[8].

In a pilot randomized, double-blind, parallel, controlled trial evaluating repetitive transcranial magnetic stimulation (rTMS) for executive function’s deficits in ASD realised on 16-35-year-olds with ASD (28 male/12 female), without intellectual disability. No evidence for efficacy of active versus sham rTMS on EF performance was found. However, promising preliminary evidence of EF performance improvement following active versus sham rTMS in participants with ASD with more severe adaptive functioning deficits was found[9].

Table-1: Original studies on TMS use in children and adolescents with autism spectrum disorder.

Study	Year	Study Type	Sample size and type	rTMS type	Length	Results
Casanova and al.	2014	Prospective follow up study	18 children with ASD (mean age = 13,1 years; 14 boys and 4 girls)	18 weekly inhibitory LF rTMS to dorsolateral prefrontal cortex DLFPC	18 weeks	Decreased irritability, hyperactivity, stereotyped behaviors, and compulsive behaviors.
Gomez and al.	2017	Short term, controlled, randomized and partial crossover study	24 children with ASD (mean age = 12,2 years)	20 sessions of left DLPFC rTMS	2 years	Significant reduction in scores (autism behavior checklist, autism treatment evaluation checklist, and autism diagnostic interview). And lasting effect of 6 months.
Barahona and al.	2018	Systematic review and meta-analysis	23 studies (4 case reports, 7 non-controlled clinical trials and 12 controlled clinical trials	rTMS	–	Significant but moderate effect on repetitive and stereotyped behaviors, and number of errors in executive functions.
Masuda and al.	2019	Systematic review	14 studies included	Low frequency rTMS and theta burst stimulation of DLPFC	–	Evidence of therapeutic effect on social functioning and repetitive behaviors.
Ameis and al.	2020	Double blind, sham controlled, clinical trial	40 patients (28 males, 12 females; 16-35 years) with ASD	20 Hz rTMS targeting DLPFC	4 weeks	No significant efficacy on executive function’s performances in patients
Chang Ni and al.	2021	Single blind, sham controlled, parallel randomized, clinical trial	78 children with ASD, intellectually able.	8 weeks intermittent theta burst stimulation rTMS.	8 weeks	Safety of this protocol of rTMS. Significant therapeutic efficacy on core symptoms and social cognitive performance.

In children and adolescents with depression:

Transcranial Magnetic Stimulation (TMS), a form of Non-Invasive Brain Stimulation (NIBS), has gained popularity in the last couple of decades. It is approved for treating depression in adults and is under investigation in pediatric depression. Recent evidence suggests that in pediatric patients of treatment-resistant depression, repetitive Transcranial Magnetic Stimulation (rTMS) of the frequency of 10 Hz when applied to the left dorsolateral prefrontal cortex (DLPFC), can lead to remission, improvement in depressive symptoms, or decrease in recurrence of episodes. Existing literature also suggests that TMS’s adverse effects in the pediatric population are minimal and comparable to those in the adult population. However, the limitations of existing studies, including lack of double-blind sham-controlled randomized trials or RCTs (only one RCT exists to date), small sample sizes, absence of long term follow-ups, and lack of homogenous age distribution, render the evidence insufficient for approval of TMS use in pediatric depression[10].

Table-2: Original studies on TMS use in children and adolescents with treatment-resistant major depressive disorder (MDD) or depressive symptoms[10].

List of abbreviations: RCT: Randomized Control Trial; rTMS: Repetitive Transcranial Magnetic Stimulation; DLPFC: Dorsolateral prefrontal cortex; SEs: Side effects; SMA: Supplementary Motor Area; sp/pp TMS: Single-pulse/paired-pulse TMS; MDD: Major Depressive Disorder; Hz: Hertz

Another more recent systematic review summarized the findings of fourteen publications using rTMS in young people aged 12-25 years with depression. Thirteen of these studies included adolescents with treatment resistant depression (TRD) which was most commonly defined as at least one failed antidepressant trial. Eight of these 14 studies were independent open-label trials (uncontrolled) (total N=142 participants across studies), and six publications reported on secondary analyses using data acquired in the original open-label studies. Although the summarized research indicated that a course of rTMS reduced depression scores in adolescents, design challenges present in each of the available trials limit the ability to draw firm conclusions regarding treatment efficacy[11].

In children and adolescents with ADHD:

In the systematic review of MASUDA and al., In patients with attention deficit/hyperactivity disorder, low-frequency repetitive transcranial magnetic stimulation applied to the left dorsolateral prefrontal cortex and high-frequency repetitive transcranial magnetic stimulation applied to the right dorsolateral prefrontal cortex may target inattention, hyperactivity, and impulsivity.

Three studies in a recent systematic review have applied rTMS in children and youth with ADHD, targeting either motor or DLPFC sites; including two randomized sham-controlled studies and one open-label tolerability and safety study, each including ≦25 participants, age range=7-20 years, and using heterogeneous treatment protocols. While Weaver et al. showed reduced ADHD symptoms following active rTMS, differences between sham and active rTMS arms were not significant. Helfrich et al. suggested a decrease in intracortical inhibition but did not study change in clinical/behavioural symptoms after rTMS, and Gómez et al. noted that qualitative reports from parents and teachers revealed improvements in inattentiveness and hyperactivity/impulsivity[3].

In children and adolescents with Tourette’s syndrome and tic disorders:

Neurostimulation is an alternative to behavioral therapy and medication. The number and the range of Neuropsychiatric disorders treated with repetitive transcranial magnetic stimulation (rTMS) continue to grow. Several small studies have suggested improvement in tic severity after rTMS for TS, whereas others have found no change. A pilot study of rTMS in children with TS used a novel functional MRI (fMRI) targeting design for ADM targeting. This pilot study showed significant improvements in tic severity in all participants (N=10, 8M, mean age 11.52 years) after 15 sessions of low-frequency (1 Hz) rTMS on the SMA (1800 stims/session). The mean decrease in tic severity was 60.4% (range 38.1% to 74.1%) according to the Yale Global Tic Severity Scale (YGTSS)[12].

Three studies have used rTMS to reduce tics targeting the supplementary motor area (SMA) due to its connections with cortical and subcortical motor areas [13]. Only the study by Wu et al. involved a randomized, double blinded, sham controlled design. In this study, participants with Tourette syndrome/chronic tic disorders between 10 and 22 years of age (n=12) were randomized to functional MRI navigated sham or active 30Hz continuous theta burst stimulation (cTBS) on two consecutive days. No differences in tic reduction were identified between active and sham groups, though cTBS was well tolerated [14].

In a recent study, ten children with Tourette syndrome (eight males, two females; 9–15y) participated in an open-label, phase 1 clinical trial. Treatment consisted of 1800 low-frequency (1Hz) neuronavigated robotic rTMS (100% resting motor threshold) to the SMA, bilaterally for 15 sessions. The primary outcome was a decreasing in Yale Global Tic Severity Scale (YGTSS) total score from baseline to posttreatment and All procedures were well-tolerated[15].

In children and adolescents with schizophrenia:

Jardri et al. reported on the treatment of an 11-year-old boy with medication resistant schizophrenia. This patient had a high level of impairment, aggression, and had struggled with delusions and hallucinations for 2 years. Antipsychotic medications had been ineffective and problematic due to side effects. An fMRI scan displayed increased auditory cortex activity with concurrent auditory hallucinations. This boy subsequently received 10 sessions of 1 Hz rTMS administered to the left temporoparietal cortex. His auditory hallucinations decreased by 50% as assessed by the Auditory Hallucinations Rating Scale. His progress was maintained with repeated sessions over 5 weeks. Based on the Children’s Global Assessment Scale his functioning improved as well. As a result, he was discharged home, and returned to school. There were no side effects or adverse effects during the rTMS treatment course[16].

Expected benefits of rTMS in children and adolescents:

Currently, 40% of adolescents with major depressive disorder (MDD) fail to respond to treatment with an antidepressant medication or evidence-based psychotherapy, resulting in treatment-resistant depression. In successfully treated youth, the relapse rates for depression are as high as 50-75%. Additional limitations include the need for monitoring adherence to antidepressant medications which are often discontinued due to difficulties tolerating side effects. In autism, there are no effective biomedical interventions that target core symptoms. Although rTMS requires a commitment of time and resources up front, it is an attractive option as it targets specific brain circuitry, treatment can be personalized and its use may limit or eliminate the need for long term medication treatment or monitoring for adherence. rTMS may also be helpful in minimizing multiple psychotropic medication treatments used in treating refractory depression and the resulting exposure to adverse effects.

While rTMS is unlikely to take the place of more accessible treatments, rTMS may in future provide a valuable alternative mental health treatment option, particularly for those individuals where conventional treatments are inaccessible, poorly tolerated, or ineffective. The fact that at least half of mental health conditions have their onset in the adolescent period and evidence that ineffective treatment leads to long term morbidity underscores the critical need to develop promising new mental health treatments for children and youth. Thus, while rTMS is not clinic-ready for any mental health target in children and youth, for the above reasons, further research and development of rTMS intervention options are critically needed[3].

Conclusion:

rTMS is a non-invasive tool with applications in clinical and neurophysiological research. At present the majority of psychiatric studies involve adult depression. However, researchers are now utilizing this modality in pediatric populations. Ethical principles and mitigation of risks for vulnerable subjects must remain at the forefront of every study in this area.

Future work in this area could serve to develop rTMS as a clinical intervention in child and adolescent psychiatry and a tool for developmental neuroscience. This will involve optimization of stimulation site, stimulation parameters, and the role of rTMS in existing treatment guidelines.

References:

[1]Barker AT, Jalinous R, Freeston IL. Non-invasive magnetic stimulation of human motor cortex. Lancet. 1985 ;1(8437) :1106-7.].

[2]Paul E. Croarkin, Christopher A. Wall & Jon Lee (2011) Applications of transcranial magnetic stimulation (TMS) in child and adolescent psychiatry, International Review of Psychiatry, 23:5, 445-453, DOI: 10.3109/09540261.2011.623688

[3]Jamil Jivraj MD, MSc1,2, Stephanie H. Ameis MD, MSc, FRCPC1,3,4 ;Is Repetitive Transcranial Magnetic Stimulation (rTMS) Ready for Clinical Use as a Treatment Tool for Mental Health Targets in Children and Youth?. J Can Acad Child Adolesc Psychiatry, 31:2, May 2022 93

[4]Manuel Fernando Casanova1,2*, Marie K. Hensley2, Estate M. Sokhadze1,2, Ayman S. El-Baz1,2, Yao Wang1,3, Xiaoli Li3 and Lonnie Sears4; Effects of weekly low-frequency rTMS on autonomic measures in children with autism spectrum disorder. Frontiers in Human Neuroscience, published: 21 October 2014 doi: 10.3389/fnhum.2014.00851.

[5] Gómez L, Vidal B, Maragoto C, Morales LM, Berrillo S, Vera Cuesta H, Baez M, Denis M, Marín T, Cabrera Y, Sánchez A, Alarcón C, Selguera M, Llanez Y, Dieguez L, Robinson M. Non-Invasive Brain Stimulation for Children with Autism Spectrum Disorders: A Short-Term Outcome Study. Behav Sci (Basel). 2017 Sep 17;7(3):63. doi: 10.3390/bs7030063. PMID: 28926975; PMCID: PMC5618071.

[6]Masuda F, Nakajima S, Miyazaki T, Tarumi R, Ogyu K, Wada M, Tsugawa S, Croarkin PE, Mimura M, Noda Y. Clinical effectiveness of repetitive transcranial magnetic stimulation treatment in children and adolescents with neurodevelopmental disorders: A systematic review. Autism. 2019 Oct;23(7):1614-1629. doi: 10.1177/1362361318822502. Epub 2019 Jan 20. PMID: 30663323.

[7]Barahona-Corrêa JB, Velosa A, Chainho A, Lopes R, Oliveira-Maia AJ. Repetitive Transcranial Magnetic Stimulation for Treatment of Autism Spectrum Disorder: A Systematic Review and Meta-Analysis. Front IntegrNeurosci. 2018 Jul 9;12:27. doi: 10.3389/fnint.2018.00027. PMID: 30038561; PMCID: PMC6046620.

[8]Ni HC, Chen YL, Chao YP, Wu CT, Wu YY, Liang SH, Chin WC, Chou TL, Gau SS, Huang YZ, Lin HY. Intermittent theta burst stimulation over the posterior superior temporal sulcus for children with autism spectrum disorder: A 4-week randomized blinded controlled trial followed by another 4-week open-label intervention. Autism. 2021 Jul;25(5):1279-1294. doi: 10.1177/1362361321990534. Epub 2021 Feb 25. PMID: 33631943.

[9]Ameis SH, Blumberger DM, Croarkin PE, Mabbott DJ, Lai MC, Desarkar P, Szatmari P, Daskalakis ZJ.Treatment of Executive Function Deficits in autism spectrum disorder with repetitive transcranial magnetic stimulation: A double-blind, sham-controlled, pilot trial. Brain Stimul.2020 May-Jun;13(3):539-547. doi: 10.1016/j.brs.2020.01.007. Epub 2020 Jan 15. PMID: 32289673; PMCID: PMC8129776.

[10] Vishal Gupta, Shivangini Singh, Pawan Kumar Gupta, Sujita Kumar Kar; Safety and Efficacy of Transcranial Magnetic Stimulation (TMS) in Pediatric Depression. J. Indian Assoc. Child Adolesc. Ment. Health 2021 ;17(3) :154-166.

[11]Hett D, Rogers J, Humpston C, Marwaha S. Repetitive Transcranial Magnetic Stimulation (rTMS) for the Treatment of Depression in Adolescence: A Systematic Review. Journal of Affective Disorders. 2021; 278:460-9.

[12]Kahl CK, Swansburg R, Kirton A, et al. Targeted; Interventions in Tourette’s using Advanced Neuroimaging and Stimulation (TITANS): study protocol for a double-blind, randomised controlled trial of transcranial magnetic stimulation (TMS) to the supplementary motor area in children with Tourette’s syndrome. BMJ Open 2021;11:e053156. doi:10.1136/ bmjopen-2021-053156.

[13]Kwon HJ, Lim WS, Lim MH, Lee SJ, Hyun JK, Chae JH, et al. 1-Hz low frequency repetitive transcranial magnetic stimulation in children with Tourette’s syndrome. Neurosci Lett. 2011;492(1):1-4.

[14]Wu SW, Maloney T, Gilbert DL, Dixon SG, Horn PS, Huddleston DA, et al. Functional MRI-navigated repetitive transcranial magnetic stimulation over supplementary motor area in chronic tic disorders. Brain Stimul. 2014;7(2):212-8.

[15]Kahl CK, Kirton A, Pringsheim T, Croarkin PE, Zewdie E, Swansburg R, Wrightson J, Langevin LM, Macmaster FP. Bilateral transcranial magnetic stimulation of the supplementary motor area in children with Tourette syndrome. Dev Med Child Neurol. 2021 Jul;63(7):808-815. doi: 10.1111/dmcn.14828. Epub 2021 Feb 25. PMID: 33634500.

[16]Jardri, R., Lucas, B., Delevoye-Turrell, Y., Delmaire, C., Delion, P., Thomas, P. &Goeb, J.L. (2007). An 11-year-old boy with drugresistant schizophrenia treated with temporo-parietal rTMS. MolecularPsychiatry, 12, 320.

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