The Impact of Cash Budgets on Poverty Reduction in Zambia: A Case Study of the Conflict between Well-Intentioned Macroeconomic Policy and Service Delivery to the Poor
Hinh T. Dinh
World Bank
Abebe Adugna
World Bank
C. Bernard Myers
World Bank
October 2002
World Bank Policy Research Working Paper No. 2914
Abstract:
Facing runaway inflation and budget discipline problems in the early 1990s, the Zambian government introduced the so-called cash budget in which government domestic spending is limited to domestic revenue, leaving no room for excess spending. Dinh, Adugna, and Myers review Zambia's experience during the past decade, focusing on the impact of the cash budget on poverty reduction.
They conclude that after some initial success in reducing hyperinflation, the cash budget has largely failed to keep inflation at low levels, created a false sense of fiscal security, and distracted policymakers from addressing the fundamental issue of fiscal discipline. More important, it has had a deeply pernicious effect on the quality of service delivery to the poor. Features inherent to the cash budgeting system facilitated a substantial redirection of resources away from the intended targets, such as agencies and ministries that provide social and economic services. The cash budget also eliminated the predictability of cash releases, making effective planning by line ministries difficult. Going forward, Zambia must adopt measures that over time will restore the
commitment to budget discipline and shelter budget execution decisions from the pressures of purely short-term exigencies.
This paper - a product of the Poverty Reduction and Economic Management Division 1, Africa Region - is part of a larger effort in the region to review public expenditure management.
Number of Pages in PDF File: 34
working papers series
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Date posted: December 21, 2004
2 Principles of Cash Management from Indian Management Thought: Thirukkural
Chendrayan Chendroyaperumal
Anna University of Technology Chennai - Saveetha Engineering College;
Deceased
June 9, 2008
Abstract:
Wise management of cash is essential for the survival and success of any business organization. Textbooks prescribe a set of principles for successful management of cash, a key component of working capital but the least productive for the firm holding it. This paper attempts to highlight the principles
of cash management propounded in Thirukkural - an Indian work on
management written more than 2000 years ago but very relevant, practicable and
consistent with that of the modern thought!
Number of Pages in PDF File: 6
Keywords: Cash Management, Working Capital, Financial Management, Thirukkural
JEL Classification: G11, G15, G31
working papers series
3 Management Accounting Systems Adoption Decisions: Evidence and Performance Implications from Startup Companies
Tony Davila
University of Navarra - IESE Business School
George Foster
Stanford Graduate School of Business
October 2004
Stanford GSB Research Paper No. 1874
Abstract:
Adopting management accounting systems are important events in the life of young and growing companies. Using a sample of 78 startup companies, we document cross-sectional differences in the adoption of operating budgets as well as seven other management accounting systems. We find that our proxies for agency costs, perceived benefits and costs, complexity of the firm, and culture explain cross-sectional differences in time-to-adoption of budgets. In particular,
the presence of venture capital, CEO experience, firm size, and the culture of the organization are associated with this adoption decision. We further investigate the effect of hiring a financial manager as an endogenous variable. In the first stage of a two-stage model, we find that CEO total experience, the presence of venture capital funds, culture, and firm size are associated with cross-sectional variation in this hiring decision. When treating this decision as endogenous, time to hiring a financial manager is unrelated to operating budget adoption. The paper also examines the association between the time-to-adoption of operating budgets and company performance. We find a significant increase in the size of the company around the adoption of operating budgets; moreover faster adoption of operating budgets is associated with faster growing companies. We extend
the
findings
to
additional
management
accounting
systems
including: cash budgets, variance analysis, operating expense approval policies, capital expenditure approval policies, product profitability, customer profitability, and customer acquisition costs. The influence of industry choice (biotechnology, information technology, or non-tech) is examined in each stage of the research.
Number of Pages in PDF File: 47
Keywords: Management accounting
JEL Classification: G34, G31, M40, M46
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Date posted: December 1, 2004
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