The heterogeneous effects of macroeconomic and financial factors on financial deepening in Africa: evidence from a method of moments quantile regression analysis
- Sanga, Bahati, Aziakpono, Meshach J
- Authors: Sanga, Bahati , Aziakpono, Meshach J
- Date: 2025
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469930 , vital:77308 , https://www.emerald.com/insight/content/doi/10.1108/jfep-07-2023-0199/full/html
- Description: This paper aims to investigate the heterogeneous effects of macroeconomic and financial factors across various distributions of financial deepening in 22 African countries over the past two decades (2000–2019). The paper uses a recent method of moments quantile regression, which accounts for the often overlooked heterogeneity effects. The analysis focuses on the banking sector, which is predominant in Africa, using a broad range of macroeconomic and financial indicators.
- Full Text:
- Date Issued: 2025
- Authors: Sanga, Bahati , Aziakpono, Meshach J
- Date: 2025
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469930 , vital:77308 , https://www.emerald.com/insight/content/doi/10.1108/jfep-07-2023-0199/full/html
- Description: This paper aims to investigate the heterogeneous effects of macroeconomic and financial factors across various distributions of financial deepening in 22 African countries over the past two decades (2000–2019). The paper uses a recent method of moments quantile regression, which accounts for the often overlooked heterogeneity effects. The analysis focuses on the banking sector, which is predominant in Africa, using a broad range of macroeconomic and financial indicators.
- Full Text:
- Date Issued: 2025
FinTech developments and their heterogeneous effect on digital finance for SMEs and entrepreneurship: evidence from 47 African countries
- Sanga, Bahati, Aziakpono, Meshach J
- Authors: Sanga, Bahati , Aziakpono, Meshach J
- Date: 2024
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469868 , vital:77302 , https://www.emerald.com/insight/content/doi/10.1108/jeee-09-2023-0379/full/html
- Description: Lack of access to finance is a major constraint to the growth of small and medium-sized enterprises (SMEs) and entrepreneurship in developing countries. The recent proliferation of mobile phone services, access to the internet and emerging technologies has led to a surge in the use of FinTech in Africa and is transforming the financial sector. This paper aims to examine whether FinTech developments heterogeneously contribute to the growth of digital finance for SMEs and entrepreneurship in 47 African countries from 2013 to 2020. The paper uses a novel method of moments quantile regression, which deals with heterogeneity and endogeneity in diverse conditions for asymmetric and nonlinear models.
- Full Text:
- Date Issued: 2024
- Authors: Sanga, Bahati , Aziakpono, Meshach J
- Date: 2024
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469868 , vital:77302 , https://www.emerald.com/insight/content/doi/10.1108/jeee-09-2023-0379/full/html
- Description: Lack of access to finance is a major constraint to the growth of small and medium-sized enterprises (SMEs) and entrepreneurship in developing countries. The recent proliferation of mobile phone services, access to the internet and emerging technologies has led to a surge in the use of FinTech in Africa and is transforming the financial sector. This paper aims to examine whether FinTech developments heterogeneously contribute to the growth of digital finance for SMEs and entrepreneurship in 47 African countries from 2013 to 2020. The paper uses a novel method of moments quantile regression, which deals with heterogeneity and endogeneity in diverse conditions for asymmetric and nonlinear models.
- Full Text:
- Date Issued: 2024
Performance determinants of non-life insurance firms: a systematic review of the literature
- Zinyoro, Tafadzwanash, Aziakpono, Meshach J
- Authors: Zinyoro, Tafadzwanash , Aziakpono, Meshach J
- Date: 2024
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469919 , vital:77307 , https://doi.org/10.1080/23311975.2024.2345045
- Description: The performance of non-life insurers is essential to the economy because of their role in mitigating the risks firms and households face. This study provides a comprehensive overview of studies examining factors affecting non-life insurers’ performance. Based on 235 studies published between 1990 and 2021, the review demonstrates that firm-level factors such as size, organisational form, diversification, capital structure, risk, reinsurance, corporate governance, distribution system, and group affiliation, and external factors such as market structure, macroeconomic, financial, and institutional development are the major determinants of non-life insurers’ performance. Although the empirical evidence on the effect of these factors is generally mixed, firm size, capitalisation, risk, macroeconomic conditions, and, to some extent, corporate governance and market structure issues show a clear relationship with insurer performance. One of the implications of this study is that there may be a need for increased solvency surveillance, especially for smaller insurers, which appear to have a higher risk of insolvency than their larger counterparts.
- Full Text:
- Date Issued: 2024
- Authors: Zinyoro, Tafadzwanash , Aziakpono, Meshach J
- Date: 2024
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469919 , vital:77307 , https://doi.org/10.1080/23311975.2024.2345045
- Description: The performance of non-life insurers is essential to the economy because of their role in mitigating the risks firms and households face. This study provides a comprehensive overview of studies examining factors affecting non-life insurers’ performance. Based on 235 studies published between 1990 and 2021, the review demonstrates that firm-level factors such as size, organisational form, diversification, capital structure, risk, reinsurance, corporate governance, distribution system, and group affiliation, and external factors such as market structure, macroeconomic, financial, and institutional development are the major determinants of non-life insurers’ performance. Although the empirical evidence on the effect of these factors is generally mixed, firm size, capitalisation, risk, macroeconomic conditions, and, to some extent, corporate governance and market structure issues show a clear relationship with insurer performance. One of the implications of this study is that there may be a need for increased solvency surveillance, especially for smaller insurers, which appear to have a higher risk of insolvency than their larger counterparts.
- Full Text:
- Date Issued: 2024
FinTech and SMEs financing: A systematic literature review and bibliometric analysis
- Sanga, Bahati, Aziakpono, Meshach J
- Authors: Sanga, Bahati , Aziakpono, Meshach J
- Date: 2023
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469857 , vital:77301 , https://doi.org/10.1016/j.digbus.2023.100067
- Description: Small and medium-sized enterprises (SMEs) face obstacles in raising capital and accessing financial services due to information asymmetry, high transaction costs and lack of collateral. FinTech developments have made gathering and sharing information easier, changed how funds are mobilized and allocated, and increased capital-raising activities. This paper conducts a systematic literature review on FinTech and SME financing for the period 2008–2022. So far there are unstructured and separate publications on this topic. Therefore, there is a need to consolidate the empirical research and their findings on the effectiveness of FinTech in meeting SMEs' financing needs. The bibliometric findings show that few studies on FinTech and SME financing are empirical in nature. These empirical studies surged a decade later after FinTech 3.0 started in 2008, with the majority of them using quantitative methods based on data from surveys and FinTech platforms. Furthermore, emerging alternative digital financing to SMEs have attracted more empirical studies than those on FinTech and bank lending to SMEs. In terms of publications, China is dominating, followed by the United States. The content analysis shows that FinTech has increased the ability of financial and non-financial institutions to collect and process accurate information about SMEs, thus reducing information asymmetry and transaction costs. FinTech has also increased the speed and quality of the lending cycle, from establishing an SME pipeline, collecting and processing information, to loan screening, monitoring and repayment. Finally, the paper presents research gaps and areas for future studies, challenges and policy recommendations on this novel subject.
- Full Text:
- Date Issued: 2023
- Authors: Sanga, Bahati , Aziakpono, Meshach J
- Date: 2023
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469857 , vital:77301 , https://doi.org/10.1016/j.digbus.2023.100067
- Description: Small and medium-sized enterprises (SMEs) face obstacles in raising capital and accessing financial services due to information asymmetry, high transaction costs and lack of collateral. FinTech developments have made gathering and sharing information easier, changed how funds are mobilized and allocated, and increased capital-raising activities. This paper conducts a systematic literature review on FinTech and SME financing for the period 2008–2022. So far there are unstructured and separate publications on this topic. Therefore, there is a need to consolidate the empirical research and their findings on the effectiveness of FinTech in meeting SMEs' financing needs. The bibliometric findings show that few studies on FinTech and SME financing are empirical in nature. These empirical studies surged a decade later after FinTech 3.0 started in 2008, with the majority of them using quantitative methods based on data from surveys and FinTech platforms. Furthermore, emerging alternative digital financing to SMEs have attracted more empirical studies than those on FinTech and bank lending to SMEs. In terms of publications, China is dominating, followed by the United States. The content analysis shows that FinTech has increased the ability of financial and non-financial institutions to collect and process accurate information about SMEs, thus reducing information asymmetry and transaction costs. FinTech has also increased the speed and quality of the lending cycle, from establishing an SME pipeline, collecting and processing information, to loan screening, monitoring and repayment. Finally, the paper presents research gaps and areas for future studies, challenges and policy recommendations on this novel subject.
- Full Text:
- Date Issued: 2023
Performance determinants of life insurers: A systematic review of the literature
- Zinyoro, Tafadzwanash, Aziakpono, Meshach J
- Authors: Zinyoro, Tafadzwanash , Aziakpono, Meshach J
- Date: 2023
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469908 , vital:77306 , https://doi.org/10.1080/23322039.2023.2266915
- Description: The life insurance industry plays a crucial role in the economy as it serves as one of the channels through which countries mobilize long-term savings, promote the development of capital markets, foster efficient capital allocation, and substitute and complement government security programs. Therefore, the performance of this sector is imperative. Since the early 1990s, researchers have been paying particular attention to the performance of life insurance firms, with a specific emphasis on identifying the key determinants of their performance. The objective of this study is to synthesize the studies that have explored this topic. Using a systematic literature review approach, the study reviews 129 studies published between 1990 and 2021. The analysis reveals that the literature primarily examines factors such as size, organizational structure, capital composition, diversification, distribution systems, risk management practices, and reinsurance strategies as key firm-specific drivers of life insurer performance. Additionally, the study underscores the importance of competition and macroeconomic conditions as commonly discussed external determinants. While a clear relationship between performance and factors like firm size, organizational structure, and risk management practices is evident, the impact of other factors remains inconclusive. One of the implications of this study is that policymakers should enact laws that promote competition in the insurance industry. The study also reveals several research gaps, including methodological gaps.
- Full Text:
- Date Issued: 2023
- Authors: Zinyoro, Tafadzwanash , Aziakpono, Meshach J
- Date: 2023
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469908 , vital:77306 , https://doi.org/10.1080/23322039.2023.2266915
- Description: The life insurance industry plays a crucial role in the economy as it serves as one of the channels through which countries mobilize long-term savings, promote the development of capital markets, foster efficient capital allocation, and substitute and complement government security programs. Therefore, the performance of this sector is imperative. Since the early 1990s, researchers have been paying particular attention to the performance of life insurance firms, with a specific emphasis on identifying the key determinants of their performance. The objective of this study is to synthesize the studies that have explored this topic. Using a systematic literature review approach, the study reviews 129 studies published between 1990 and 2021. The analysis reveals that the literature primarily examines factors such as size, organizational structure, capital composition, diversification, distribution systems, risk management practices, and reinsurance strategies as key firm-specific drivers of life insurer performance. Additionally, the study underscores the importance of competition and macroeconomic conditions as commonly discussed external determinants. While a clear relationship between performance and factors like firm size, organizational structure, and risk management practices is evident, the impact of other factors remains inconclusive. One of the implications of this study is that policymakers should enact laws that promote competition in the insurance industry. The study also reveals several research gaps, including methodological gaps.
- Full Text:
- Date Issued: 2023
How ready is the East African community for monetary union? New evidence from an interest rate pass-through analysis
- Bholla, Zohaib S, Aziakpono, Meshach J, Snowball, Jeanette D
- Authors: Bholla, Zohaib S , Aziakpono, Meshach J , Snowball, Jeanette D
- Date: 2011
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469720 , vital:77288 , https://hdl.handle.net/10520/EJC21519
- Description: The five member countries of the East African Community (EAC), namely, Burundi, Kenya, Rwanda, Tanzania and Uganda have set the target of achieving a monetary union by 2012. The question that arises is: to what extent are they prepared for a monetary integration? Against this backdrop, this paper evaluates the current level of convergence amongst these East African countries by analysing whether the pass-through of monetary policy in the five countries has become similar over time. We use cointegration, error correction, and asymmetric error correction modelling frameworks and interest rate data over a ten year sample period, from 1999 to 2008, in the analysis. The results suggest that the degree of convergence amongst the countries remains low and that there are significant rigidities in the banking markets over time. While the pass-through of monetary policy has improved with respect to the banking loan markets, it has not done so in the deposit market. Overall the evidence suggests that implementing an EAC-wide monetary union will require more work to be done to stimulate the development of their financial systems and to harmonise their financial and monetary policies.
- Full Text:
- Date Issued: 2011
- Authors: Bholla, Zohaib S , Aziakpono, Meshach J , Snowball, Jeanette D
- Date: 2011
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469720 , vital:77288 , https://hdl.handle.net/10520/EJC21519
- Description: The five member countries of the East African Community (EAC), namely, Burundi, Kenya, Rwanda, Tanzania and Uganda have set the target of achieving a monetary union by 2012. The question that arises is: to what extent are they prepared for a monetary integration? Against this backdrop, this paper evaluates the current level of convergence amongst these East African countries by analysing whether the pass-through of monetary policy in the five countries has become similar over time. We use cointegration, error correction, and asymmetric error correction modelling frameworks and interest rate data over a ten year sample period, from 1999 to 2008, in the analysis. The results suggest that the degree of convergence amongst the countries remains low and that there are significant rigidities in the banking markets over time. While the pass-through of monetary policy has improved with respect to the banking loan markets, it has not done so in the deposit market. Overall the evidence suggests that implementing an EAC-wide monetary union will require more work to be done to stimulate the development of their financial systems and to harmonise their financial and monetary policies.
- Full Text:
- Date Issued: 2011
Dynamic returns linkages and volatility transmission between South African and world major stock markets
- Chinzara, Zivanemoyo, Aziakpono, Meshach J
- Authors: Chinzara, Zivanemoyo , Aziakpono, Meshach J
- Date: 2009
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469698 , vital:77279 , https://hdl.handle.net/10520/EJC21489
- Description: This paper analyses returns and volatility linkages between the South African (SA) equity market and the world major equity markets using daily data for the period 1995-2007. Also analysed is the nature of volatility, the long term trend of volatility and the risk premium hypothesis. The univariate GARCH and multivariate Vector Autoregressive models are used. Results show that both returns and volatility linkages exist between the SA and the major world stock markets, with Australia, China and the US showing most influence on SA returns and volatility. Volatility was found to be inherently asymmetric but reasonably stable over time in all the stock markets studied, and no significant evidence was found in support for the risk premium hypothesis.
- Full Text:
- Date Issued: 2009
- Authors: Chinzara, Zivanemoyo , Aziakpono, Meshach J
- Date: 2009
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469698 , vital:77279 , https://hdl.handle.net/10520/EJC21489
- Description: This paper analyses returns and volatility linkages between the South African (SA) equity market and the world major equity markets using daily data for the period 1995-2007. Also analysed is the nature of volatility, the long term trend of volatility and the risk premium hypothesis. The univariate GARCH and multivariate Vector Autoregressive models are used. Results show that both returns and volatility linkages exist between the SA and the major world stock markets, with Australia, China and the US showing most influence on SA returns and volatility. Volatility was found to be inherently asymmetric but reasonably stable over time in all the stock markets studied, and no significant evidence was found in support for the risk premium hypothesis.
- Full Text:
- Date Issued: 2009
Exchange rate pass‐through to import prices in South Africa: is there asymmetry?
- Karoro, Tapiwa D, Aziakpono, Meshach J, Cattaneo, Nicolette S
- Authors: Karoro, Tapiwa D , Aziakpono, Meshach J , Cattaneo, Nicolette S
- Date: 2009
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469753 , vital:77291 , https://doi.org/10.1111/j.1813-6982.2009.01216.x
- Description: This paper examines the magnitude and speed of exchange rate pass‐through (ERPT) to import prices in South Africa. It further explores whether the direction and size of changes in the exchange rate have different pass‐through effects on import prices, i.e. whether the exchange rate pass‐through is symmetric or asymmetric. The findings of the study suggest that ERPT in South Africa is incomplete but relatively high. Furthermore, ERPT is found to be higher in periods of rand depreciation than appreciation, which supports the binding quantity constraint theory. There is also evidence to suggest that pass‐through is slightly higher in periods of small changes than large changes in the exchange rate in harmony with the menu cost theory when the invoices are denominated in the exporters' currency.
- Full Text:
- Date Issued: 2009
- Authors: Karoro, Tapiwa D , Aziakpono, Meshach J , Cattaneo, Nicolette S
- Date: 2009
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469753 , vital:77291 , https://doi.org/10.1111/j.1813-6982.2009.01216.x
- Description: This paper examines the magnitude and speed of exchange rate pass‐through (ERPT) to import prices in South Africa. It further explores whether the direction and size of changes in the exchange rate have different pass‐through effects on import prices, i.e. whether the exchange rate pass‐through is symmetric or asymmetric. The findings of the study suggest that ERPT in South Africa is incomplete but relatively high. Furthermore, ERPT is found to be higher in periods of rand depreciation than appreciation, which supports the binding quantity constraint theory. There is also evidence to suggest that pass‐through is slightly higher in periods of small changes than large changes in the exchange rate in harmony with the menu cost theory when the invoices are denominated in the exporters' currency.
- Full Text:
- Date Issued: 2009
Integration of the South African equity market into the world major stock markets: implication for portfolio diversification
- Chinzara, Zivanemoyo, Aziakpono, Meshach J
- Authors: Chinzara, Zivanemoyo , Aziakpono, Meshach J
- Date: 2009
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469889 , vital:77305 , https://hdl.handle.net/10520/EJC33719
- Description: The paper investigates whether there are any benefits from international equity diversification for South African long term investors using daily stock market indices for seven world stock markets for the period 1995-2008. Firstly, pairwise portfolios are tested for long-run comovement using the bivariate cointegration approach. Wider portfolios are then tested for long-run comovement using the multivariate cointegration based on the Johansen and Juselius (1992) approach. While no bivariate cointegration exists between the South Africa and each of the selected world major equity markets for the entire 1995-2008, cointegration exist with US if a dummy is included. Multivariate cointegration analysis suggests that long-run comovement exists for some of the wider portfolios with most of long-run coefficients being negative. Overall, our findings show that integration of SA to the major world markets is weak suggesting that international portfolio diversification is potentially worthwhile for South African investors.
- Full Text:
- Date Issued: 2009
- Authors: Chinzara, Zivanemoyo , Aziakpono, Meshach J
- Date: 2009
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469889 , vital:77305 , https://hdl.handle.net/10520/EJC33719
- Description: The paper investigates whether there are any benefits from international equity diversification for South African long term investors using daily stock market indices for seven world stock markets for the period 1995-2008. Firstly, pairwise portfolios are tested for long-run comovement using the bivariate cointegration approach. Wider portfolios are then tested for long-run comovement using the multivariate cointegration based on the Johansen and Juselius (1992) approach. While no bivariate cointegration exists between the South Africa and each of the selected world major equity markets for the entire 1995-2008, cointegration exist with US if a dummy is included. Multivariate cointegration analysis suggests that long-run comovement exists for some of the wider portfolios with most of long-run coefficients being negative. Overall, our findings show that integration of SA to the major world markets is weak suggesting that international portfolio diversification is potentially worthwhile for South African investors.
- Full Text:
- Date Issued: 2009
Is financial integration a complement or substitute to domestic financial development in a developing country? Evidence from the SACU countries
- Aziakpono, Meshach J, Burger, P, Du Plessis, S
- Authors: Aziakpono, Meshach J , Burger, P , Du Plessis, S
- Date: 2009
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469731 , vital:77289 , https://hdl.handle.net/10520/EJC21490
- Description: Using a multivariate cointegration and error correction modelling framework, with data from the SACU countries, this paper tested two rival theories on the effect of financial integration (FI), that is whether FI is a complement or a substitute to financial development (FD). Financial integration is a complement where it helps to boost domestic FD through greater competitive pressures on financial intermediaries, and encourage international good practices in accounting, financial regulation and supervision. It is a substitute where FI renders the local financial system irrelevant or causes it to deteriorate. Overall, the empirical analysis finds strong evidence of a long-run relationship between FD and FI across the SACU countries. The results show that causality runs in both directions between FD and FI across the SACU countries with the exception of Lesotho where the causality runs mainly from FI to FD. No consistent effect of FI on FD (or the reverse) emerged from the empirical results in this sample. The results were also affected by the measurements used for the capital stock and FD. These results do not support any one-size-fits-all policy approach to stimulating FD or harnessing the benefits of FI, rather, they suggest that country specific aspects of the financial system should be paramount when analysing the impact of FI on FD.
- Full Text:
- Date Issued: 2009
- Authors: Aziakpono, Meshach J , Burger, P , Du Plessis, S
- Date: 2009
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469731 , vital:77289 , https://hdl.handle.net/10520/EJC21490
- Description: Using a multivariate cointegration and error correction modelling framework, with data from the SACU countries, this paper tested two rival theories on the effect of financial integration (FI), that is whether FI is a complement or a substitute to financial development (FD). Financial integration is a complement where it helps to boost domestic FD through greater competitive pressures on financial intermediaries, and encourage international good practices in accounting, financial regulation and supervision. It is a substitute where FI renders the local financial system irrelevant or causes it to deteriorate. Overall, the empirical analysis finds strong evidence of a long-run relationship between FD and FI across the SACU countries. The results show that causality runs in both directions between FD and FI across the SACU countries with the exception of Lesotho where the causality runs mainly from FI to FD. No consistent effect of FI on FD (or the reverse) emerged from the empirical results in this sample. The results were also affected by the measurements used for the capital stock and FD. These results do not support any one-size-fits-all policy approach to stimulating FD or harnessing the benefits of FI, rather, they suggest that country specific aspects of the financial system should be paramount when analysing the impact of FI on FD.
- Full Text:
- Date Issued: 2009
Financial and monetary autonomy and interdependence between South Africa and the other SACU countries
- Authors: Aziakpono, Meshach J
- Date: 2008
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469764 , vital:77292 , https://doi.org/10.1111/j.1813-6982.2008.00173.x
- Description: The paper uses cointegration and error correction modelling techniques together with tests of weak exogeneity, and monthly interest rates for the period 1990 to 2005, to examine the degree of financial and monetary autonomy and interdependence between South Africa and the other Southern African Customs, Union (SACU) countries. The results reveal a high level of dependence of the other SACU countries' financial systems on South Africa's financial system, which suggests that a monetary unification with a single central bank (South African Reserve Bank) and monetary policy for the union is feasible.
- Full Text:
- Date Issued: 2008
- Authors: Aziakpono, Meshach J
- Date: 2008
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469764 , vital:77292 , https://doi.org/10.1111/j.1813-6982.2008.00173.x
- Description: The paper uses cointegration and error correction modelling techniques together with tests of weak exogeneity, and monthly interest rates for the period 1990 to 2005, to examine the degree of financial and monetary autonomy and interdependence between South Africa and the other Southern African Customs, Union (SACU) countries. The results reveal a high level of dependence of the other SACU countries' financial systems on South Africa's financial system, which suggests that a monetary unification with a single central bank (South African Reserve Bank) and monetary policy for the union is feasible.
- Full Text:
- Date Issued: 2008
Adjustment of commercial bank's interest rates and the effectiveness of monetary policy in South Africa
- Aziakpono, Meshach J, Wilson, Magdalene K, Manuel, Jason
- Authors: Aziakpono, Meshach J , Wilson, Magdalene K , Manuel, Jason
- Date: 2007
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469676 , vital:77277 , https://hdl.handle.net/10520/EJC33833
- Description: The study uses the asymmetric error correction model as in Scholnick (1996) and two wholesale bank interest rates (prime interbank lending and the negotiable certificate of deposit rates), to examine how market interest rates adjust to changes in the SARB official rate under different policy regimes in South Africa. The study covered the period between 1973 and 2004, which was divided into six sub-periods to reflect the different monetary policy regimes in South Africa. The results indicate a varying degree of adjustment under the different regimes, but clearly show that there was greater speed of adjustment under regimes that stress more market-oriented policies as opposed to control measures. The response of market Interest rates to monetary policy was quick and with high magnitude which suggest a fairly efficient money market. The evidence on the asymmetric adjustment was weak. On the whole, the results of this study suggest that a market-oriented policy would be more effective in transmitting the effects of the Bank's monetary policy stance to the rest of the economy.
- Full Text:
- Date Issued: 2007
- Authors: Aziakpono, Meshach J , Wilson, Magdalene K , Manuel, Jason
- Date: 2007
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469676 , vital:77277 , https://hdl.handle.net/10520/EJC33833
- Description: The study uses the asymmetric error correction model as in Scholnick (1996) and two wholesale bank interest rates (prime interbank lending and the negotiable certificate of deposit rates), to examine how market interest rates adjust to changes in the SARB official rate under different policy regimes in South Africa. The study covered the period between 1973 and 2004, which was divided into six sub-periods to reflect the different monetary policy regimes in South Africa. The results indicate a varying degree of adjustment under the different regimes, but clearly show that there was greater speed of adjustment under regimes that stress more market-oriented policies as opposed to control measures. The response of market Interest rates to monetary policy was quick and with high magnitude which suggest a fairly efficient money market. The evidence on the asymmetric adjustment was weak. On the whole, the results of this study suggest that a market-oriented policy would be more effective in transmitting the effects of the Bank's monetary policy stance to the rest of the economy.
- Full Text:
- Date Issued: 2007
Effects of financial integration on financial development and economic performance of the SACU countries
- Authors: Aziakpono, Meshach J
- Date: 2007
- Subjects: To be catalogued
- Language: English
- Type: text , conference paper
- Identifier: http://hdl.handle.net/10962/469944 , vital:77309 , ISBN
- Description: This paper examines the effects of financial integration on financial development and economic performance of the SACU countries within a country-specific framework. The paper employs four measures of financial integration, two measures of financial development and real per capita output and annual time series from 1970 to 2004 for the analysis. The econometric analyses were carried out using the Johansen cointegration and error correction modelling techniques. The effects of financial integration were mixed, but what is apparent is that countries that are more integrated to South Africa produce more discernible evidence of positive effects of financial integration. The paper attributes the weak gains from the official integration arrangement to weak institutional and structural impediments in the countries.
- Full Text:
- Date Issued: 2007
- Authors: Aziakpono, Meshach J
- Date: 2007
- Subjects: To be catalogued
- Language: English
- Type: text , conference paper
- Identifier: http://hdl.handle.net/10962/469944 , vital:77309 , ISBN
- Description: This paper examines the effects of financial integration on financial development and economic performance of the SACU countries within a country-specific framework. The paper employs four measures of financial integration, two measures of financial development and real per capita output and annual time series from 1970 to 2004 for the analysis. The econometric analyses were carried out using the Johansen cointegration and error correction modelling techniques. The effects of financial integration were mixed, but what is apparent is that countries that are more integrated to South Africa produce more discernible evidence of positive effects of financial integration. The paper attributes the weak gains from the official integration arrangement to weak institutional and structural impediments in the countries.
- Full Text:
- Date Issued: 2007
Forecasting recession in South Africa: A comparison of the yield curve and other economic indicators
- Khomo, Melvin M, Aziakpono, Meshach J
- Authors: Khomo, Melvin M , Aziakpono, Meshach J
- Date: 2007
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469775 , vital:77293 , https://doi.org/10.1111/j.1813-6982.2007.00117.x
- Description: The paper uses the standard probit model proposed by Estrella and Mishkin (1996), as well as the modified probit model suggested by Dueker (1997), to examine the ability of the yield curve to predict recessions in South Africa, and compares its predictive power with other commonly used variables such as the growth rate of real money supply, changes in stock prices and the index of leading economic indicators. Compared with other indicators, real M3 growth does not provide much information about future recessions, whilst movements in the All‐Share index provide information for up to 12 months but do not do better than the yield curve. The index of leading economic indicators outperforms the yield spread in the short run up to 4 months but the yield spread performs better at longer horizons.
- Full Text:
- Date Issued: 2007
Forecasting recession in South Africa: A comparison of the yield curve and other economic indicators
- Authors: Khomo, Melvin M , Aziakpono, Meshach J
- Date: 2007
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469775 , vital:77293 , https://doi.org/10.1111/j.1813-6982.2007.00117.x
- Description: The paper uses the standard probit model proposed by Estrella and Mishkin (1996), as well as the modified probit model suggested by Dueker (1997), to examine the ability of the yield curve to predict recessions in South Africa, and compares its predictive power with other commonly used variables such as the growth rate of real money supply, changes in stock prices and the index of leading economic indicators. Compared with other indicators, real M3 growth does not provide much information about future recessions, whilst movements in the All‐Share index provide information for up to 12 months but do not do better than the yield curve. The index of leading economic indicators outperforms the yield spread in the short run up to 4 months but the yield spread performs better at longer horizons.
- Full Text:
- Date Issued: 2007
Inflation targeting and the Fisher effect in South Africa: An empirical investigation
- Mitchell-Innes, Henry A, Aziakpono, Meshach J, Faure, Alexander P
- Authors: Mitchell-Innes, Henry A , Aziakpono, Meshach J , Faure, Alexander P
- Date: 2007
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469786 , vital:77294 , https://doi.org/10.1111/j.1813-6982.2007.00143.x
- Description: The paper analyses the relationship between expected inflation and nominal interest rates during a period of inflation targeting in South Africa, i.e. from 2000 to 2005. Specifically, it investigates the Fisher hypothesis that nominal interest rates move one‐to‐one with expected inflation, leaving the real interest rate unaffected. The analysis distinguishes between a short‐run Fisher effect and a long‐run Fisher effect. Using cointegration and error correction models (for monthly data for the period April 2000 to July 2005), it was found that the short‐run Fisher hypothesis did not hold during the relevant period under the inflation targeting monetary policy framework in South Africa. This is attributed to a combination of the South African Reserve Bank's (SARB) control over short‐term interest rates and the effects of the monetary transmission mechanism. The long‐run Fisher hypothesis could not be confirmed in its strictest form: while changes in inflation expectations move in the same direction as the nominal long‐term interest rate. This suggests that monetary policy has an influence on the real long-term interest rate, which has positive implications for general economic activity, thus confirming the credibility of the inflation targeting framework.
- Full Text:
- Date Issued: 2007
- Authors: Mitchell-Innes, Henry A , Aziakpono, Meshach J , Faure, Alexander P
- Date: 2007
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469786 , vital:77294 , https://doi.org/10.1111/j.1813-6982.2007.00143.x
- Description: The paper analyses the relationship between expected inflation and nominal interest rates during a period of inflation targeting in South Africa, i.e. from 2000 to 2005. Specifically, it investigates the Fisher hypothesis that nominal interest rates move one‐to‐one with expected inflation, leaving the real interest rate unaffected. The analysis distinguishes between a short‐run Fisher effect and a long‐run Fisher effect. Using cointegration and error correction models (for monthly data for the period April 2000 to July 2005), it was found that the short‐run Fisher hypothesis did not hold during the relevant period under the inflation targeting monetary policy framework in South Africa. This is attributed to a combination of the South African Reserve Bank's (SARB) control over short‐term interest rates and the effects of the monetary transmission mechanism. The long‐run Fisher hypothesis could not be confirmed in its strictest form: while changes in inflation expectations move in the same direction as the nominal long‐term interest rate. This suggests that monetary policy has an influence on the real long-term interest rate, which has positive implications for general economic activity, thus confirming the credibility of the inflation targeting framework.
- Full Text:
- Date Issued: 2007
Financial integration amongst the SACU countries: evidence from interest rate pass-through analysis
- Authors: Aziakpono, Meshach J
- Date: 2006
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469709 , vital:77287 , https://hdl.handle.net/10520/EJC21430
- Description: Using cointegration and error correction techniques, as well as impulse response analysis, the study examined the extent of interest rates pass-through to measure the degree of financial integration amongst the SACU countries. The results confirm the dominant role of South Africa in the Union and show that there exists a hierarchy of integration of the financial systems of each member state with that of South Africa, with Namibia at the top, followed by Swaziland, then Lesotho, with Botswana at the bottom. The results further suggest that the prevailing integration between the financial systems is mainly as a result of policy convergence, rather than market convergence, which suggest limited arbitrage opportunities between the countries. The lack of arbitrage opportunities is attributed to poor institutional developments and limited investment opportunities in the BLNS countries when compared to South Africa.
- Full Text:
- Date Issued: 2006
- Authors: Aziakpono, Meshach J
- Date: 2006
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469709 , vital:77287 , https://hdl.handle.net/10520/EJC21430
- Description: Using cointegration and error correction techniques, as well as impulse response analysis, the study examined the extent of interest rates pass-through to measure the degree of financial integration amongst the SACU countries. The results confirm the dominant role of South Africa in the Union and show that there exists a hierarchy of integration of the financial systems of each member state with that of South Africa, with Namibia at the top, followed by Swaziland, then Lesotho, with Botswana at the bottom. The results further suggest that the prevailing integration between the financial systems is mainly as a result of policy convergence, rather than market convergence, which suggest limited arbitrage opportunities between the countries. The lack of arbitrage opportunities is attributed to poor institutional developments and limited investment opportunities in the BLNS countries when compared to South Africa.
- Full Text:
- Date Issued: 2006
Real exchange rate volatility and its effect on trade flows: New evidence from South Africa
- Takaendesa, Peter, Tsheole, Thapelo, Aziakpono, Meshach J
- Authors: Takaendesa, Peter , Tsheole, Thapelo , Aziakpono, Meshach J
- Date: 2006
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469742 , vital:77290 , https://hdl.handle.net/10520/EJC21431
- Description: This paper empirically re-examines the impact of real exchange rate volatility on South Africa's export flows to the United States for the period 1992:1 - 2004:4, using the two-country model of international trade. The exponential generalised autoregressive conditional heteroscedasticity (EGARCH) model is used to measure real exchange rate volatility. Cointegration and error- correction models are used to obtain the estimates of the cointegrating relations and the short-run dynamics, respectively. Further, variance decomposition analysis is used to show the dynamic adjustments of real exports to shocks in the fundamentals and the proportion thereof. The results obtained in this paper summarily provide evidence that real exchange rate volatility has a negative effect on real exports.
- Full Text:
- Date Issued: 2006
- Authors: Takaendesa, Peter , Tsheole, Thapelo , Aziakpono, Meshach J
- Date: 2006
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469742 , vital:77290 , https://hdl.handle.net/10520/EJC21431
- Description: This paper empirically re-examines the impact of real exchange rate volatility on South Africa's export flows to the United States for the period 1992:1 - 2004:4, using the two-country model of international trade. The exponential generalised autoregressive conditional heteroscedasticity (EGARCH) model is used to measure real exchange rate volatility. Cointegration and error- correction models are used to obtain the estimates of the cointegrating relations and the short-run dynamics, respectively. Further, variance decomposition analysis is used to show the dynamic adjustments of real exports to shocks in the fundamentals and the proportion thereof. The results obtained in this paper summarily provide evidence that real exchange rate volatility has a negative effect on real exports.
- Full Text:
- Date Issued: 2006
Financial development and economic growth in Southern Africa
- Authors: Aziakpono, Meshach J
- Date: 2005
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469812 , vital:77297
- Description: In the last two decades the link between financial intermediation (FI) and economic growth has generated a great deal of interest among academics, policy makers and economists around the world. Several studies have addressed the potential links between financial development and economic growth (see Levine 1997 for a detailed review). However, despite the rapidly growing literature, the debate concerning the role played by the development of financial intermediaries in economic growth is far from settled. Moreover, much of the empirical evidence on the links between financial development and economic growth comes from a period when cross-border capital movements were very limited and as such were ignored in most analyses. The increasing international interest in economic integration and monetary union has spawned new regional initiatives in every continent. As a result global financial markets are becoming increasingly open and integrated, and international capital mobility has increased. For instance, private capital flows to emerging market economies have grown from close to nothing in the 1970s, to $170 billion in the 1980s, and to $1.3 trillion by the late 1990s (Guiso et al., 2002: 2). The question is: how will this development affect the effectiveness.
- Full Text:
- Date Issued: 2005
- Authors: Aziakpono, Meshach J
- Date: 2005
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469812 , vital:77297
- Description: In the last two decades the link between financial intermediation (FI) and economic growth has generated a great deal of interest among academics, policy makers and economists around the world. Several studies have addressed the potential links between financial development and economic growth (see Levine 1997 for a detailed review). However, despite the rapidly growing literature, the debate concerning the role played by the development of financial intermediaries in economic growth is far from settled. Moreover, much of the empirical evidence on the links between financial development and economic growth comes from a period when cross-border capital movements were very limited and as such were ignored in most analyses. The increasing international interest in economic integration and monetary union has spawned new regional initiatives in every continent. As a result global financial markets are becoming increasingly open and integrated, and international capital mobility has increased. For instance, private capital flows to emerging market economies have grown from close to nothing in the 1970s, to $170 billion in the 1980s, and to $1.3 trillion by the late 1990s (Guiso et al., 2002: 2). The question is: how will this development affect the effectiveness.
- Full Text:
- Date Issued: 2005
The transmission of monetary policy under the repo system in South Africa: An empirical analysis
- De Angelis, Catherine H, Aziakpono, Meshach J, Faure, Alexander P
- Authors: De Angelis, Catherine H , Aziakpono, Meshach J , Faure, Alexander P
- Date: 2005
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469797 , vital:77295 , https://doi.org/10.1111/j.1813-6982.2005.00045.x
- Description: The study examines the influence of the repo rate on the interbank rate and analyses whether the transmission channels of interest rates have changed since the adjustment to the repo system in September 2001. The paper employs the Granger causality test using the ECM framework. The results suggest that the influence of the repo rate on the interbank rate was stronger before the adjustments to the system were made. The interbank rate and the repo rate were found to “reverse” roles in the period after the adjustments to the system. Our results show that the changes to the repo system in 2001 did not lead to the achievement of the intended transmission channel; instead it was found that the system in place before the changes were made was in fact already achieving the transmission path that the authorities hoped to accomplish by changing the system.
- Full Text:
- Date Issued: 2005
- Authors: De Angelis, Catherine H , Aziakpono, Meshach J , Faure, Alexander P
- Date: 2005
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469797 , vital:77295 , https://doi.org/10.1111/j.1813-6982.2005.00045.x
- Description: The study examines the influence of the repo rate on the interbank rate and analyses whether the transmission channels of interest rates have changed since the adjustment to the repo system in September 2001. The paper employs the Granger causality test using the ECM framework. The results suggest that the influence of the repo rate on the interbank rate was stronger before the adjustments to the system were made. The interbank rate and the repo rate were found to “reverse” roles in the period after the adjustments to the system. Our results show that the changes to the repo system in 2001 did not lead to the achievement of the intended transmission channel; instead it was found that the system in place before the changes were made was in fact already achieving the transmission path that the authorities hoped to accomplish by changing the system.
- Full Text:
- Date Issued: 2005
Determinants of financial intermediation in the SACU countries: Preliminary evidence from a panel data analysis
- Authors: Aziakpono, Meshach J
- Date: 2004
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469687 , vital:77278
- Description: The study explores empirically five macroeconomic determinants of financial intermediation, namely: growth in income, level of real income, inflation rate, exchange rate and interest rate spread in five SACU countries. Employing four measures of financial intermediation, an equilibrium model of financial intermediation was estimated using a system seemingly unrelated regression panel estimator. The fixed effect and country-specific coefficients were obtained and interpreted. The level of income and exchange rate were the most important determinants of financial intermediation among the countries. In line with theoretical models, which indicate that the level of economic growth can accelerate the process of financial intermediation, in three of the countries - Botswana, Namibia and South Africa, a very significant positive relationship between level of income and the indexes of financial intermediation was observed. But for Lesotho and Swaziland, a reverse relationship was obtained. This may be due to negative externalities from the more developed financial sectors of South Africa resulting from the economic and monetary integration. The results on the exchange rate highlight the need for a stable and predictable exchange rate policy in order to stimulate financial intermediation. Also, the results confirm the potential for inflation to negatively affect financial intermediation. Lastly, the results relating to interest rate spread highlight how high levels of the spread can prevent deep financial intermediation.
- Full Text:
- Date Issued: 2004
- Authors: Aziakpono, Meshach J
- Date: 2004
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/469687 , vital:77278
- Description: The study explores empirically five macroeconomic determinants of financial intermediation, namely: growth in income, level of real income, inflation rate, exchange rate and interest rate spread in five SACU countries. Employing four measures of financial intermediation, an equilibrium model of financial intermediation was estimated using a system seemingly unrelated regression panel estimator. The fixed effect and country-specific coefficients were obtained and interpreted. The level of income and exchange rate were the most important determinants of financial intermediation among the countries. In line with theoretical models, which indicate that the level of economic growth can accelerate the process of financial intermediation, in three of the countries - Botswana, Namibia and South Africa, a very significant positive relationship between level of income and the indexes of financial intermediation was observed. But for Lesotho and Swaziland, a reverse relationship was obtained. This may be due to negative externalities from the more developed financial sectors of South Africa resulting from the economic and monetary integration. The results on the exchange rate highlight the need for a stable and predictable exchange rate policy in order to stimulate financial intermediation. Also, the results confirm the potential for inflation to negatively affect financial intermediation. Lastly, the results relating to interest rate spread highlight how high levels of the spread can prevent deep financial intermediation.
- Full Text:
- Date Issued: 2004