Conceptual Exposition of the Effect of Inflation on Bank Performance
Mohammed Umar,
Danjuma Maijama’a,
Mohammad Adamu
Issue:
Volume 3, Issue 5, October 2014
Pages:
55-59
Received:
27 October 2014
Accepted:
7 November 2014
Published:
20 November 2014
Abstract: Despite the fact that, banks can withstand the effects of inflation in the short run, since banking system mostly operates with reference to interest rate and maturity of financial instruments with less concern about the purchasing power of money. However, the banking system cannot absorb the shocks in the long run. The objective of this paper is to conceptually expose the effect of inflation on bank performance. To accomplish this objective, the paper reviews some theoretical and empirical works on the effect of inflation on financial sector performance. The paper found two divergent views. Thus, inflation has an adverse effect on banking sector performance and its spillover effect is very harmful to the overall economy. Inflation affect the purchasing power and bank exchange rate regime, opportunity cost of holding currency in the future, worsen loans policy, disrupt business plans and the equity holding performance of banks. While the other side of the argument states that inflation leads to an increase in bank performance as long as the banks can be able to anticipate future inflation and adjust interest rate to generate higher revenue than cost which leads to higher profit and performance as a result of adjusting the rate of interest.
Abstract: Despite the fact that, banks can withstand the effects of inflation in the short run, since banking system mostly operates with reference to interest rate and maturity of financial instruments with less concern about the purchasing power of money. However, the banking system cannot absorb the shocks in the long run. The objective of this paper is t...
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The Economics of Education in Adam Smith’s “Wealth of Nations”
Issue:
Volume 3, Issue 5, October 2014
Pages:
60-64
Received:
31 October 2014
Accepted:
11 November 2014
Published:
20 November 2014
Abstract: In “intellectual history” perspective, Adam Smith was able to find out the idea of human capital especially from microeconomic point of view. The result originates thanks to a rudimentary use of the category of the human capital. However, on the basis of other premises this essay attempts also to bring to the fore that the results of Smith’s reflection change according to a macro point of view. Paying attention to the increasing of the social product, the importance of knowledge and human resources gains a crucial role in explaining the growth. From this second perspective, human capital realizes the incorporation of the technological element not into the labour but into the capital factor. Under this light Smith is more strictly linked to an approach familiar with the neoclassic theories of growth.
Abstract: In “intellectual history” perspective, Adam Smith was able to find out the idea of human capital especially from microeconomic point of view. The result originates thanks to a rudimentary use of the category of the human capital. However, on the basis of other premises this essay attempts also to bring to the fore that the results of Smith’s reflec...
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