Macroeconomic determinants of stock market development in South Africa

2019 ◽  
Vol 14 (2) ◽  
pp. 322-342 ◽  
Author(s):  
Sin-Yu Ho
Keyword(s):  
South Africa ◽  
Stock Market ◽  
South African ◽  
Banking Sector ◽  
Trade Openness ◽  
Market Development ◽  
The South ◽  
Content Type ◽  
Stock Market Development ◽  
Market Capitalisation

Purpose The purpose of this paper is to examine the macroeconomic determinants of stock market development in South Africa during the period 1975–2015. Specifically, it examines the impact of banking sector development, economic growth, inflation rate, real interest rate and trade openness on the development of the South African stock market. Design/methodology/approach The author employs autoregressive distributed lag bounds testing procedure that allows the author to empirically investigate both the short- and long-run relationships between the stock market development and its determinants in the context of South Africa. In addition, the author also conducts a sensitivity analysis by accounting for the presence of structural breaks in the underlying series to check for the robustness of the estimation. Findings This paper confirms the findings by other studies that banking sector development and economic growth promote stock market development, while inflation rate and real interest rate inhibit stock market development. In addition, this paper finds an interesting result in the fact that trade openness has a negative impact on stock market development, which is different from the findings of many other studies. Originality/value Currently, while the theoretical and empirical literature presents diverse views on the relationship between each determinant and stock market development, no study has focussed on the South African stock market. Given the significant role that the South African stock market plays in Africa as measured by its market capitalisation and market capitalisation ratio, there is a need for a better understanding of the macroeconomic factors influencing its development.

scholarly journals The macroeconomic drivers of stock market development: evidence from Hong Kong

2019 ◽  
Vol 12 (2) ◽  
pp. 185-207 ◽  
Author(s):  
Sin-Yu Ho ◽  
Nicholas M. Odhiambo
Keyword(s):  
Hong Kong ◽  
Stock Market ◽  
Inflation Rate ◽  
Banking Sector ◽  
Trade Openness ◽  
Market Development ◽  
Content Type ◽  
Stock Market Development ◽  
Banking Sector Development ◽  
Short Run

Purpose The purpose of this paper is to examine the macroeconomic drivers of stock market development in Hong Kong during the period 1992Q4-2016Q3. Specifically, it investigates the impact of banking sector development, economic growth, inflation rate, exchange rate, trade openness and stock market liquidity on stock market development. Design/methodology/approach This paper uses quarterly time-series data covering the period 1992Q4-2016Q3, which have been obtained from various reliable sources. The study uses the autoregressive distributed lag bounds testing procedure to identify both the long- and short-run macroeconomic drivers of stock market development in Hong Kong. Findings We find that banking sector development and economic growth have positive impacts on stock market development, whereas the inflation rate and the exchange rate have negative impacts on stock market development both in the long and short run. In addition, the results show that trade openness has a positive long-run impact but a negative short-run impact on stock market development. Originality/value Despite the phenomenal growth of stock market in Hong Kong, there are, to the best of the authors’ knowledge, no relevant studies on the macroeconomic drivers of stock market development in Hong Kong. Therefore, this paper endeavours to enrich the literature by examining the macroeconomic drivers of stock market development in Hong Kong during the period 1992Q4-2016Q3.

scholarly journals Financial development, openness in financial services trade and economic growth

2019 ◽  
Vol 3 (2) ◽  
pp. 42-65 ◽  
Author(s):  
Rabia Khatun ◽  
Jagadish Prasad Bist
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Financial Development ◽  
Financial Services ◽  
Banking Sector ◽  
Market Development ◽  
Services Trade ◽  
Content Type ◽  
Stock Market Development ◽  
Insurance Sector

Purpose The purpose of this paper is to examine the relationship between financial development, openness in financial services trade and economic growth in BRICS countries for the period 1990–2012. Design/methodology/approach An index for financial development has been constructed using principal component analysis technique by including banking sector development, stock market development, bond market development and insurance sector development. For the robustness of the result, the long-run cointegrating relationship amongst the variables has been analyzed. Findings Overall financial development has a positive and significant impact on economic growth. To take the full advantage of openness in financial services trade, countries need to put more emphasis on the development of their stock markets, bond markets and the insurance sector. The result shows that openness in financial services trade has a positive impact on economic growth when the stock market, bond market and insurance sector are included in the system. Research limitations/implications The policy implication of the findings is that policymakers should focus more on developing all four areas of finance to get the full benefit of the financial system on the process of economic growth. Originality/value The authors have constructed the better indicators of financial development in the case of BRICS economies. Most of the studies in BRICS economies have measured the development of the financial sector as either banking sector development or stock market development. However, the present study includes all four areas of finance (banking sector development, stock market development, insurance sector development and bond market development) into account.

Do stock market and banking sectors development promote innovation efficiency?

2018 ◽  
Vol 14 (5) ◽  
pp. 506-521
Author(s):  
Soo-Wah Low ◽  
Ali Albada ◽  
Nurhatiah Ahmad Chukari ◽  
Noor Azlan Ghazali
Keyword(s):  
Stock Market ◽  
Stock Markets ◽  
Banking Sector ◽  
Generalized Method Of Moments ◽  
World Intellectual Property Organization ◽  
Market Development ◽  
Content Type ◽  
Stock Market Development ◽  
Innovation Output ◽  
Developed Stock Markets

Purpose The purpose of this paper is to investigate the impacts of stock market and banking sectors development on a country’s efficiency in transforming its innovation input into output. Design/methodology/approach This study employs a generalized method-of-moments panel estimator to examine the role of stock market and banking development in influencing innovation efficiency. Findings Findings show that a country’s stock market development is positively related to its innovation efficiency ratio. Countries with more developed stock markets have relatively higher efficiency in transforming innovation input into innovation output than those with less developed stock markets. There is no evidence that innovation efficiency is influenced by banking sector development. However, when stock market and banking sectors are modeled together, while stock market development retains its positive influence, the findings indicate that banking sector exerts negative impact on innovation efficiency. Practical implications The findings provide useful insights to guide policy decisions for a country’s innovation agenda in enhancing its innovation performance. The findings imply that stock market development should be embraced as one of the key policy areas in order for a country to be more efficient in transforming its innovation input into innovation output. Originality/value This paper provides first evidence using data sourced from Global Innovation Index report, first available in 2007 and published by Cornell University, INSEAD and the World Intellectual Property Organization.

scholarly journals Financial development and economic growth: panel evidence from BRICS

2019 ◽  
Vol 24 (47) ◽  
pp. 113-126 ◽  
Author(s):  
Biplab Kumar Guru ◽  
Inder Sekhar Yadav
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Financial Development ◽  
Banking Sector ◽  
Market Development ◽  
Content Type ◽  
Stock Market Development ◽  
Development Indicators ◽  
Banking Sector Development ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between financial development and economic growth for five major emerging economies: Brazil, Russia, India, China and South (BRICS) during 1993 to 2014 using banking sector and stock market development indicators. Design/methodology/approach To begin with, the study first examined some of the principal indicators of financial development and macroeconomic variables of the selected economies. Next, using generalized method of moment system estimation (SYS-GMM), the relationship between financial development and growth is investigated. The banking sector development indicators used in the study include size of the financial intermediaries, credit to deposit ratio (CDR) and domestic credit to private sector (CPS), whereas the stock market development indicators are value of shares traded and turnover ratio. Also, some macroeconomic control variables such as inflation, exports and the enrolment in secondary education were used. Findings The examination of the principal indicators of financial development and macroeconomic variables have shown considerable differences between the selected economies. Results from the dynamic one-step SYS-GMM estimates confirm that in presence of turnover ratio, all the selected banking development indicators such as size of financial intermediaries, CDR and CPS are positively significantly determining economic growth. Similarly, in presence of all the selected banking sector development indicators, value of shares traded is found to be positively significantly associated with economic growth. However, the same is not true when turnover ratio is regressed in presence of banking sector variables. Overall, the evidence suggests that banking sector development and stock market development indicators are complementary to each other in stimulating economic growth. Practical implications A positive association between financial development and growth indicates that the policymakers should take necessary measures toward simultaneous development of both banking sector as well as stock market for inducing growth. Originality/value The present paper attempts to examine the relationship between financial development and growth using both banking sector and stock market development indicators which has not been attempted before for BRICS. Also, most of the existing studies are found in case of developed economies. This paper tries to fill this void by studying five major emerging economies.

scholarly journals Capital market development and economic growth: Empirical evidence from South Africa

2011 ◽  
Vol 8 (2) ◽  
pp. 217-226 ◽  
Author(s):  
Nicholas Odhiambo
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Stock Market ◽  
Causal Relationship ◽  
Testing Procedure ◽  
Market Development ◽  
Bounds Testing ◽  
Stock Market Development ◽  
Real Gdp Per Capita ◽  
Market Capitalisation

In this paper, the dynamic causal relationship between stock market development and economic growth in South Africa is examined – using the newly developed ARDL-Bounds testing procedure. The study uses three proxies of stock market development, namely stock market capitalisation, stock market traded value and stock market turnover, against real GDP per capita, a proxy for economic growth. Using the 1971-2007 data sets, the empirical results of this study show that the causal relationship between stock market development and economic growth is sensitive to the proxy used for measuring the stock market development. When the stock market capitalisation is used as a proxy for stock market development, the economic growth is found to Granger-cause stock market development. However, when the stock market traded value and the stock market turnover are used, the stock market development seems to Granger-cause economic growth. Overall, the study finds the causal flow from stock market development to economic growth to predominate. The results apply irrespective of whether the causality is estimated in the short-run or in the long-run.

Sustainable housing financing model to reduce South Africa housing deficit

2017 ◽  
Vol 10 (3) ◽  
pp. 410-430 ◽  
Author(s):  
Bashir Olanrewaju Ganiyu ◽  
Julius Ayodeji Fapohunda ◽  
Rainer Haldenwang
Keyword(s):  
South Africa ◽  
South African ◽  
Affordable Housing ◽  
Low Income ◽  
Low Cost ◽  
South African Government ◽  
The South ◽  
African Government ◽  
Content Type ◽  
Mortgage Payment

Purpose This study aims to identify and establish effective housing financing concepts to be adopted by government in achieving its mandate of providing sustainable affordable housing for the poor to decrease the building of shacks, as well as proposing solutions to the housing deficit in South Africa. A rise in demand and shortage in supply of housing calls for the need to address issues of affordable housing in South Africa, and developing countries in general, to ensure a stable and promising future for poor families. Design/methodology/approach Literature has revealed that the South African government, at all levels, accorded high priority to the provision of low-cost housing. Thus, government has adopted subsidy payment as a method of financing affordable housing to ensure that houses are allocated free to the beneficiaries. This also addresses the historically race-based inequalities of the past, but unfortunately, this has not been fully realised. This study uses a sequential mixed method approach, where private housing developers and general building contractors were the research participants. The qualitative data were analysed using a case-by-case analysis, and quantitative data were analysed using a descriptive statistical technique on SPSS. Findings The results of the qualitative analysis reveal a gross abuse of the housing subsidies system by the beneficiaries of government-funded housing in South Africa. This is evident from illegal sale of the houses below market value. This has led to a continual building of shacks and an increased number of people on the housing waiting list instead of a decrease in the housing deficit. The results from quantitative analysis affirm the use of “Mortgage Payment Subsidies, Mortgage Payment Deductions, Down-Payment Grant and Mortgage Interest Deductions” as viable alternatives to subsidy payment currently in use to finance affordable housing projects by the South African Government. Practical implications At the moment, the focus of the South African National Government is continual provision of free housing to the historically disadvantage citizens, but the housing financing method being used encourages unapproved transfer of ownership in the affordable housing sector. This study thus recommends the use of an all-inclusive housing financing method that requires a monetary contribution from the beneficiaries to enable them take control of the process. Originality/value The relational interface model proposed in this study will reduce pressure on government budgetary provision for housing and guarantee quick return of private developers’ investment in housing. Government must, as a matter of urgency, launch a continuous awareness programme to educate the low-income population on the value and the long-term benefits of the housing.

Professional accounting education programmes in South Africa and India

2014 ◽  
Vol 4 (1) ◽  
pp. 97-116 ◽  
Author(s):  
Lesley Stainbank ◽  
Devi Dutt Tewari
Keyword(s):  
South Africa ◽  
International Education ◽  
South African ◽  
Single Point ◽  
Secondary Data ◽  
Relevant Information ◽  
Accounting Education ◽  
The South ◽  
Content Type ◽  
Education Model

Purpose – The purpose of this paper is to provide a contextual analysis of the professional accounting education programmes in South Africa and India by benchmarking both programmes to the International Education Standards (IESs) of the International Federation of Accountants (IFAC). Design/methodology/approach – The research methodology is a qualitative archival approach extracting information from secondary data (Statements of Membership Obligations’ compliance questionnaires available on the IFAC web site and information from the web sites of the relevant professional accountancy bodies). Findings – With regards to the IESs, the study found that both countries comply with the standards, although important differences occur. In South Africa, most of the education takes place during the university phase; and while both countries cover the content requirements, India covers the acquisition of professional skills more formally; ethics is taught and examined in both countries; both countries require a three year training contract; both countries have a final examination but the content of the examinations are different; and South Africa requires more continuous professional development than India. These findings, when related to India's and South Africa's relative positions on certain of the Global Competitiveness Indices may indicate that India could learn from the South African accountancy education model in order to strengthen the Indian position with regards to auditing and reporting standards. Research limitations/implications – A limitation of the study is that it did not investigate the quality of the relative education programmes and it benchmarks both programmes at a single point in time. Practical implications – India could strengthen its accounting profession by implementing some of the South African aspects of its education model. South African could consider adopting the flexibility in the entry requirements in the Indian education model in order to increase the number of accountants in South Africa. These findings may also be useful to other developing countries to identify practices which could be adopted if suitable in their respective countries. Originality/value – The study is original as accountancy education programmes in India and South Africa have not been contrasted before. In view of their similar colonial background and the fact that both countries are major economic and political forces in their respective regions, the value of this study is that it provides useful and relevant information to India, South Africa and other countries with similar economic and social backgrounds.

Stock market development and income inequality

2017 ◽  
Vol 44 (1) ◽  
pp. 87-98 ◽  
Author(s):  
Athanasios Tsagkanos
Keyword(s):  
Income Inequality ◽  
Stock Market ◽  
Low Income ◽  
Negative Relationship ◽  
Market Development ◽  
Rate System ◽  
Content Type ◽  
Stock Market Development ◽  
Tax Rate ◽  
Indirect Relationship

Purpose The purpose of this paper, in contrast to other studies, is to examine an indirect relationship in terms of the effect of income inequality with stock market development in countries South of the Euro-zone during the period 2002-2013. Design/methodology/approach The author adopts a new econometric method, the Improved Augmented Regression Method, to obtain bias-reduced and stationary-corrected estimators. Findings The results reveal a negative relationship that puts into doubt the recovery of growth. Originality/value The new econometric methodology leads to a novel suggested policy on the need for reforms adopting a low-income tax rate system and reinforcement of export-oriented productivity. This conclusion is strengthened by the respective relationship in USA.

Pathways through homelessness: the perceptions of homeless children in Pietermaritzburg, South Africa

2020 ◽  
Vol 15 (3) ◽  
pp. 141-160
Author(s):  
Anna Wilshire Jones Bornman ◽  
Carol Jean Mitchell
Keyword(s):  
South Africa ◽  
South African ◽  
Well Being ◽  
South African Context ◽  
Homeless Children ◽  
The South ◽  
Research Attention ◽  
Content Type ◽  
Factors Influencing ◽  
African Context

Purpose The purpose of this study was to explore children’s pathways through homelessness within the South African context, with particular attention paid to pathways out of homelessness. This study focusses on factors influencing children’s successful transitions out of homelessness. Design/methodology/approach A qualitative exploratory design was used, using interviews with nine children who had exited or were in the process of exiting homelessness. Interviews were conducted at a children’s shelter in Pietermaritzburg or in the children’s home environments. Interviews were analysed thematically. Findings An ecological framework was used to frame the factors influencing children’s pathways in, through and out of homelessness in the children’s narratives. These included institutions, relationships and intrapersonal strengths and resources. The study suggested that constructive relationships with shelter staff and parental figures, as well as intrapersonal strengths, were the most prominent factors in children successfully negotiating their way through their homelessness. The importance of a relationship with the paternal family within some African cultures was also a point of leverage. Research limitations/implications Implications for policy and practise include the need for systemic change, as well as greater support for shelters and shelter staff. The issue of rivalry in the shelter context and the role of the paternal family in the reintegration process require more research attention. The research is limited to homeless children in Pietermaritzburg, South Africa. Practical implications This study provided feedback to the shelter regarding their strategies for assisting homeless children off the streets. It further provided evidence for the importance of the work of the shelter, to strengthen advocacy efforts. This may be useful to others in similar circumstances. Social implications This study highlights the importance of macrosystemic interventions in the efforts to assist homeless children, while at the same time not ignoring the inter and intra, personal elements to enhancing their well-being. Originality/value This paper is singular in its exploration of factors influencing children’s successful transitions out of homelessness within the South African context.

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