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According to the authors of Zambia, poverty is on the rise in the country, its economy is not growing fast enough, the quality of economic governance is on the decline, and its public resources are not well spent. Addressing the longstanding challenges that Zambia faces in public expenditure management will require strong political will. In order to assure that public accountability is enduring and not dependent on the government which happens to be in power, it must strengthen budget processes and institutions that can provide public oversight and promote basic checks and balances. This country study provides an analysis of how Zambia can strengthen budgetary processes and institutions for accountability and effective service delivery to its citizens. It’s specific objectives are to: (a) provide comprehensive and integrated assessment of the country’s overall fiduciary risk – budget management, financial systems and auditing, and public procurement; (b) highlight progress on public expenditure management reforms and challenges; and (c) develop a realistic action plan outlining short and medium term remedial measures which it’s government may consider for implementation.

Effective, efficient and transparent management of public resources is particularly important in a poor country like Niger. This study shows how difficult it is for Niger to significantly change its expenditure composition in a short time span. A narrow and volatile domestic resource base, heavy dependence on aid, and a large share of pre-determined expenditures such as external debt payments are important factors behind this lack of flexibility. There are ways, though, to create space in the budget for increasing public spending on priority sectors. The study identifies a number of measures in this regard, such as increasing domestic revenues, more realistic and conservative budgeting, strengthening cash management, controlling the wage bill, prudent borrowing and attracting higher external financing for recurrent costs in priority sectors. The study also shows that enhancing the efficiency and transparency of public spending is as important as increasing spending for PRS priority sectors. It thoroughly assesses public management systems in Niger and presents an action plan, jointly elaborated by the Government and its main external partners, to address the main challenges in this area. This action plan contains a priority set of measures to improve budget preparation, execution as well as internal and external oversight.

This article studies different methods of assigning a good to budget-constrained agents. Schemes that assign the good randomly and allow resale may outperform the competitive market in terms of Utilitarian efficiency. The socially optimal mechanism involves random assignment at a discount—an in-kind subsidy—and a cash incentive to discourage low-valuation individuals from claiming the good.

Asymmetric information between banks and firms can preclude financing of valuable projects. Trade credit can alleviate this problem by incorporating in the lending relation the private information held by suppliers about their customers. Incentive compatibility conditions prevent collusion between two of the agents (e.g., the buyer and the seller) against the third (e.g., the bank). Consistent with the empirical findings of Petersen and Rajan (1995), firms without relationships with banks resort more to trade credit, and sellers with greater ability to generate cash flows provide more trade credit. Finally small firms react to monetary contractions by using trade credit, consistent with the empirical results of Nilsen (1994).

In today's business environment, cash flows are one of the main resources that provide conditions for sustainable business development, maintaining the company's solvency, and protecting against the risk of bankruptcy. The success of the production, investment, and financial activities depends on the effective use of funds, therefore, the issues of improving internal cash flow controlling become especially relevant in the context of the aggravation of the external financial and economic situation in the country, the increase in the cost of financial resources, and the restrictions of requirements imposed by investors and creditors. The article presents current trends in improving the organization's cash flow controlling system. It offers methodological approaches to the organization of cash flow monitoring and justification of the system of analytical indicators for evaluating the effectiveness of cash asset management. It justifies the sequence of implementation of the mechanism for rationing the need for funds to ensure the permanent solvency of the organization.

The dramatic fall in oil prices after 2014 has led to more extensive capital rationing in international oil companies, and subsequent fierce competition between resource extraction countries to attract scarce investment. This situation is not adequately addressed by the large general literature on international taxation and multinational companies, since it fails to take account of capital rationing in its assumption that companies sanction all projects with a positive net present after-tax value. The paper examines the effect of tax design on international capital allocation when companies ration capital. We analyse capital allocation and government take for four equal oil projects in three different fiscal regimes: the U.S. GoM, UK upstream and Norway offshore. Implications for optimal tax design are discussed.

The controversy on whether investmentcash flow sensitivity is a good indicator of financing constraints is still unsolved. We apply a comprehensive approach by cross-validating our analysis with both balance sheet and qualitative data on self-declared credit rationing and financing constraints on a sample of mainly small and medium-sized firms. Our qualitative information shows that (self-declared) credit rationing is (weakly) related to both traditional a priori factors—such as firm size, age and location—and lenders' rational decisions taken on the basis of their credit risk models. We use the qualitative information on firms which were denied (additional) credit to provide evidence relevant to the investmentcash flow sensitivity debate. The evidence shows that self-declared credit rationing significantly discriminates between firms which possess or not such sensitivity, while a priori criteria do not. The same result does not apply when we consider the wider group of financially constrained firms (which do not seem to have a higher investment-cash flow sensitivity), supporting the more recent empirical evidence in this direction.

BackgroundGiven that the impact of the South African business environment on small and medium-sized enterprises’ (SMEs) management of trade credit is largely unknown, this article argues that certain internal or external business environment variables could significantly impact SMEs’ management of trade credit effectiveness, making it necessary to ask the impact of business environment in South Africa on SMEs’ trade credit management effectiveness.AimTo determine the impact of internal (managerial competencies, collateral, financial and business information and networking) and external (legal system, ethics, macroeconomy and corruption) business environment variables on SMEs’ management of trade credit effectiveness.SettingThis study was conducted by administering an online questionnaire.MethodQuantitative research design with purposive sampling as the sampling method, administrated to 10 450 SMEs within South Africa.ResultsThe results reveal several internal (5) and external (4) business environment factors significantly impacting SMEs’ effectiveness in managing trade credit.ConclusionThe article reveals how internal and external business environment factors contribute to increased SME effectiveness in managing trade credit and, in so doing, helps mitigate financial problems associated with SMEs’ trade credit as a result of asymmetric information such as adverse selection, moral hazard and credit rationing, while also understanding the significance of corruption on SMEs’ effectiveness in managing trade credit.

This paper studies the performance of delegated decision-making schemes in a two-stage, multidivision capital budgeting problem for a shared investment with an inherent abandonment option. Applying both robust goal congruence and sequential adverse selection frameworks, we show that the optimal capital budgeting mechanism entails a capital charge rate above the firm's cost of capital in the first stage but below the cost of capital in the second stage. Further, the first-stage asset cost-sharing rule depends only on the relative divisional growth profiles, and equal cost sharing can be optimal even when the divisions receive significantly different benefits from the shared investment project. In the presence of an adverse selection problem, all agency costs are incorporated into the second-stage budgeting mechanism, leaving the first-stage capital charge rate and asset-sharing rule unaffected even though the agency problem induces capital rationing at both stages. This paper was accepted by Mary Barth, accounting.

Background. By 2009, two decades of war and widespread displacement left the majority of the population of Northern Uganda impoverished. Methods. This study used a cluster-randomized design to test the hypothesis that a poverty alleviation program would improve economic security and reduce symptoms of depression in a sample of mostly young women. Roughly 120 villages in Northern Uganda were invited to participate. Community committees were asked to identify the most vulnerable women (and some men) to participate. The implementing agency screened all proposed participants, and a total of 1800 were enrolled. Following a baseline survey, villages were randomized to a treatment or wait-list control group. Participants in treatment villages received training, start-up capital, and follow-up support. Participants, implementers, and data collectors were not blinded to treatment status. Results. Villages were randomized to the treatment group (60 villages with 896 participants) or the wait-list control group (60 villages with 904 participants) with an allocation ration of 1:1. All clusters participated in the intervention and were included in the analysis. The intent-to-treat analysis included 860 treatment participants and 866 control participants (4.1% attrition). Sixteen months after the program, monthly cash earnings doubled from UGX 22 523 to 51 124, non-household and non-farm businesses doubled, and cash savings roughly quadrupled. There was no measurable effect on a locally derived measure of symptoms of depression. Conclusions. Despite finding large increases in business, income, and savings among the treatment group, we do not find support for an indirect effect of poverty alleviation on symptoms of depression.