The Macro-Economic Variables, Tax Revenue and Performance of Financial Institutions in South Sudan
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Date
2025-02
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Publisher
Kenyatta University
Abstract
The different financial institutions, including those in the South Sudan, have continued to have an uncertain future due to the changes in the macroeconomic environment and the political state of the Country. The argument of financial reforms and arrangement requires South Sudan’s authorities to devise some informed decisions on how to critically match money supply and fulfillment of demand for money to fairly standardized financial system. However, in order for any organization to have a going concern, the same have to be able to make profits and have good positive payoffs in all its investments. The South Sudan’s currency has also taken a hit by the occurrences brought about by the political class which has warranted the changes in strategy by the Central Bank of South Sudan (CBSS) and other statutory bodies in a bid to protect the SSP from free fall. The researcher analyzed effect of the Macroeconomic variables, Tax Revenue and performance of financial institutions specifically commercial Banks in South Sudan. Specific objectives that underpinned the study include; to examine the effect of foreign exchange rates; to establish the effect of inflation rate; to determine the effect of interest rates and to analyze the moderating effect of tax revenue on the relationship between macroeconomic variables and performance of financial institutions in South Sudan. The theories that guided this study include the purchasing power parity theory, the monetarist theory and fisher’s effects. The study was based on the positivism philosophy and descriptive research design was used. The target population used were 30 registered commercial banks. The researcher adopted secondary datasets in order to get the findings of the study. Apart from the descriptive statistics and the diagnostic tests, the researcher also conducted regression and correlation analysis in order to check for effects of independent variables on the dependent variable and the linear relationship between the variables respectively. The different financial institutions that were considered in the study were identified by systematic random sampling. The researcher collected the data from different sources that are from the leading financial institutions in South Sudan. The Econometric views (EVIEWS) software was utilized for data analysis and management. Further, regression model was also estimated to show association between the dependent variable (financial institutions’ performance) and independent macroeconomic variables. It was established that there was an inverse statistically significant relationship between macroeconomic variables and tax revenues and performance of the financial institutions in South Sudan. In conclusion, the government can actually utilize macroeconomic variables in order to influence the performance of financial institutions to enhance policy formulation and implementation. The study recommends that the government should develop policy and formulate laws that are able to inform the financial sector and the banking environment to allow for proper functioning of the financial institutions and hence, increased profitability. It also recommends that the different macroeconomic policy such as the fiscal policy and the monetary policy should be addressed in such a way that they are favorable to the financial environment and the money market within the South Sudan. Finally, it recommends that in some of the policy making, the central bank committees must also work hand in hand with the financial institutions in order to understand how they will be able to manage the financial markets and the financial systems
Description
A Research Thesis Submitted to the School of Business, Economics and Tourism in Partial Fulfilment of the Requirement of the Award Degree of Master of Science in, Finance of Kenyatta University, February 2025.
Supervisor
1. John Mungai
2. Anthony Thuo