Financial Sector Development In South Africa, 1970-2002

Purpose The purpose of this paper is to examine the relationship between financial sector development and inequality in South Africa for the period from 1990 to 2012. Unlike previous studies, the study examines the role of both the broad measure of financial sector development (Bank credit to the private sector) and a measure of financial inclusion (ATMs). Design/methodology/approach Utilising quarterly data, the autoregressive distributed lag bounds testing model approach to cointegration test was estimated. The approach was preferred due to its compatibility with data of different orders and flexibility. Findings The findings indicate that financial development, especially when it is inclusive reduces the level of inequality in South Africa both in the short- and long-run. The results also highlighted that economic growth, external trade activities and government activities have played a very important role in reducing inequality in South Africa. On the other hand the empirical results also highlight that increasing inflation is regressive on inequality in South Africa. Research limitations/implications The results from the study imply that financial development on its own though important may not benefit the disadvantaged groups such as the poor and the rural community until it is inclusive. It is important to note that the study was carried out on the premise that inequality plays a very important role in exacerbating poverty levels in South Africa. Practical implications The paper highlights another avenue which authorities can pursue to reduce the level of inequality in the country. Social implications The paper documents the importance of financial inclusion in reducing the level of inequality in South Africa rather than advocating for financial sector development only. Originality/value The paper makes a contribution through analysing the effect of financial inclusion on income inequality rather than broad financial sector development which is common to the majority of the available empirical studies.

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Financial Development, Savings and Investment in South Africa: A Dynamic Causality Test

Global Economy Journal ◽

10.1515/gej-2017-0042 ◽

2017 ◽

Vol 17 (3) ◽

pp. 20170042 ◽

Cited By ~ 1

Author(s):

Brian Muyambiri ◽

Nicholas Odhiambo

Keyword(s):

South Africa ◽

Causal Relationship ◽

Granger Causality ◽

Financial Development ◽

Financial Sector ◽

Policy Implications ◽

Bounds Testing ◽

Causality Test ◽

Development Indicators ◽

Financial Sector Development

This study investigates the causal relationship between financial development and investment in South Africa during the period from 1976 to 2014. The study incorporates both bank-based and market-based segments of financial sector development. In addition, composite indices for bank-based and market-based financial development indicators are used as explanatory variables. The study incorporates savings as an intermittent variable – thereby creating a simple trivariate Granger-causality model. Using the ARDL bounds testing approach to cointegration and the ECM-based Granger-causality test, the study finds a unidirectional causal flow from investment to financial development, but only in the short run. In the long run, the study fails to find any causal relationship between financial development and investment. These results apply irrespective of whether bank-based or market-based financial development is used as a proxy for financial sector development. The findings of this study have important policy implications.

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The relationship between financial sector development and savings mobilisation in South Africa: An empirical study

Development Southern Africa ◽

10.1080/0376835x.2016.1203760 ◽

2016 ◽

Vol 33 (5) ◽

pp. 703-718 ◽

Cited By ~ 2

Author(s):

Forget Mingiri Kapingura ◽

Paul Alagidede

Keyword(s):

South Africa ◽

Empirical Study ◽

Financial Sector ◽

Financial Sector Development ◽

The Relationship

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Financial Sector Development Indicators and Economic Growth in Cameroon and South Africa

Social Indicators Research ◽

10.1007/s11205-013-0236-8 ◽

2013 ◽

Vol 115 (2) ◽

pp. 813-836 ◽

Cited By ~ 2

Author(s):

Oludele Akinloye Akinboade ◽

Emilie Chanceline Kinfack

Keyword(s):

Economic Growth ◽

South Africa ◽

Financial Sector ◽

Development Indicators ◽

Financial Sector Development

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The Impact of Financial Sector Development on Economic Growth: Analysis of the Financial Development Gap between Cameroon and South Africa

SSRN Electronic Journal ◽

10.2139/ssrn.2616296 ◽

2015 ◽

Cited By ~ 2

Author(s):

Piabuo Serge Mandiefe

Keyword(s):

Economic Growth ◽

South Africa ◽

Financial Development ◽

Growth Analysis ◽

Financial Sector ◽

Financial Sector Development ◽

The Impact ◽

Development Gap

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Financial development, economic growth and millennium development goals in South Africa

International Journal of Social Economics ◽

10.1108/ijse-01-2013-0006 ◽

2015 ◽

Vol 42 (5) ◽

pp. 459-479 ◽

Cited By ~ 6

Author(s):

Oludele Akinloye Akinboade ◽

Emilie Chanceline Kinfack

Keyword(s):

Economic Growth ◽

South Africa ◽

Financial Development ◽

Millennium Development Goals ◽

Financial Sector ◽

Development Economic ◽

Content Type ◽

Financial Sector Development ◽

Development Goals ◽

The Relationship

Purpose – The purpose of this paper is to empirically report the findings on the relationship between financial sector development, economic growth and of millennium development goals (MDGs) for poverty reduction, education and health development in South Africa. Design/methodology/approach – The autoregressive distributed lag bounds testing technique was applied to two indicators of financial development, economic growth and four indicators of MDGs. Findings – Economic growth and MDGs jointly cause financial development. Similarly, economic growth and financial sector development jointly cause the attainment of MDGs. The attainment of MDGs such as increased per capita expenditure on food and education as well as economic growth jointly cause financial development. Practical implications – The findings highlight the complexity of the relationship between financial development, economic growth and MDGs. It is essential that the government of South Africa pursue a three track strategy of promoting financial sector development, economic growth and MDGs. The development of one strategy causes and is caused by the development of the other two. Originality/value – Relationships between financial development, economic growth and MDG targets are unsettled in the literature. This paper studies the link between the three variables in South Africa. Hence, the contribution of this study is to enrich the understanding of this important field in the context of an important African country.

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