Liquidity shocks and capital market efficiency in South Africa
- Authors: Matapuri, Dexter Tinotenda Kushinga
- Date: 2023-10-13
- Subjects: Liquidity (Economics) , Stock exchanges South Africa , Insolvency , Securities South Africa , Capital market South Africa , Investments, Foreign
- Language: English
- Type: Academic theses , Master's theses , text
- Identifier: http://hdl.handle.net/10962/419610 , vital:71659
- Description: Financial markets are dynamic in nature. As such, one way to keep up with their plethora of variables is to conduct research and seek understanding on how they all work together. Understanding financial market mechanics is the key to achieving and maintaining efficient capital markets. The goal of many economies is to have efficient capital markets mainly because they entail economic growth. One of the common avenues here being foreign direct investments. Therefore, over the years, a lot of financial economics research has been conducted on how best to attain financial market development which ultimately yields capital market efficiency. The opposite is also true. This research therefore set out to study the impact of liquidity shocks on capital market efficiency, more specifically stock market efficiency. As such, the overarching research goal was to determine the link between liquidity shocks and stock market efficiency in South Africa. Furthermore, the research also tested whether there is a homogenous impact exerted by liquidity shocks on the JSE Financial 15, JSE Industrial 25 and JSE Resource 20 indices. The arguments and thus conclusions of the research were constructed based on existing theories such as the Efficient Market hypothesis, Behavioural Finance and the Adaptive Market Hypothesis. Literature and existing empirical evidence related to the topic were also analysed and used for the same purpose. Econometric methods used to achieve these research goals include the time series and panel ARDL, impulse response and variance decomposition tests and the Granger Causality tests. The research found that liquidity shocks do impact stock market efficiency in South Africa in both the short run and long run. The direction of the impact was noted to vary with time and dependent on the liquidity shock proxy. Key findings here were that liquidity shocks lower JSE All-Share index efficiency in the short run thus allowing market participants to beat the market in the initial phases of a liquidity shock. Adding on, it was also found that illiquidity shocks lower efficiency for the JSE Financial 15 and Industrial 25 indices in the short run. In the long run, stock market efficiency is enhanced no matter the source of the shock. As such, the research recommended that regulatory policies should focus on liquidity shocks in the short run for the JSE All-Share index and on illiquidity shocks in the short run for the Financial 15 and Industrial 25 indices. , Thesis (MCom) -- Faculty of Commerce, Economics and Economic History, 2023
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- Date Issued: 2023-10-13
The adoption of international financial reporting standards and foreign direct investment inflows: the moderating effect of the institutional environment in Africa
- Authors: Simbi, Chipo
- Date: 2023-10-13
- Subjects: International Financial Reporting Standards , Investments, Foreign , Institutional infrastructure , Accounting Law and legislation , Auditing Law and legislation , Generalized method of moments , Difference in differences
- Language: English
- Type: Academic theses , Doctoral theses , text
- Identifier: http://hdl.handle.net/10962/419230 , vital:71627 , DOI 10.21504/10962/419230
- Description: Globalisation has created a need for an international accounting language to facilitate the smooth flow of trade across countries. In 2003, in an effort to establish a global financial reporting language, the International Accounting Standards Board (IASB) developed a single set of high-quality accounting principles known as the International Financial Reporting Standards (IFRS). Over the last decade, several African countries have adopted IFRS, and Africa has become the second-largest adopting continent after Europe. IFRS promotes improved quality of disclosure of accounting transactions, reduces information asymmetry between preparers and users of financial information, lowers the cost of investing, and breaks down information barriers to cross-border investment. Researchers suggest many benefits of IFRS adoption for macroeconomic indicators such as Foreign Direct Investment (FDI). The reduction in information acquisition and processing costs which translates into the reduction in investment costs, has been cited by most researchers. Researchers have argued, however, that the economic benefits of IFRS in Africa depend on the strength of the institutional environment. They also argue that the Western environment in which the IFRS was developed differs from the African environment. Thus, the universal approach of the IASB may not be appropriate due to the historical, social, economic and political context of African countries. The impact of the adoption of IFRS by African countries requires further examination, particularly as a weak institutional environment confronts many African countries. Three research questions are designed for this study; (1) Is there a significant change in FDI inflows for IFRS adopters in selected African countries after the adoption? (2) Is there a significant change in FDI inflows due to the institutional environment? (3) Does the institutional environment in IFRS-adopting countries moderate the effect of IFRS on FDI in selected African countries? The present study is underpinned by the new institutional theory, the information asymmetry theory, the eclectic theory and the signalling theory, each of which provide reasons why African countries have adopted IFRS. Nine hypotheses are developed, based on the research questions, and tested using the Systems General Method of Moments and the Difference-in-Difference method. The study uses data from 26 African countries, 15 adopting and 11 non-adopting countries, over the period 1996 - 2018. First, the study establishes that the adoption of IFRS positively and significantly affects FDI inflows into the selected sample of African countries. Second, the study concludes that legal enforcement, accounting and auditing standards enforcement, and language origin positively and significantly impact FDI inflows into these countries. Legal origin, however, has a positive but insignificant association with FDI inflows. Third, legal enforcement, historical ties, accounting and auditing enforcement and the quality of the institutional environment are found to moderate the effect of IFRS adoption on FDI inflows. These results indicate that IFRS is a crucial determinant of FDI inflows into African countries, but a supportive institutional environment is needed for African countries to attract FDI inflows after adoption. The results contribute to the accounting and finance literature on FDI into African countries, and may assist the investment community to assess the institutional risk associated with investing in IFRS adopting African countries. , Thesis (PhD) -- Faculty of Commerce, Accounting, 2023
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- Date Issued: 2023-10-13
Foreign Direct Investment in SADC: Role of Soft and Hard Infrastructure
- Authors: Manamike, Taonga
- Date: 2022-04
- Subjects: Investments, Foreign , Southern African Development Community
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10948/57831 , vital:58275
- Description: The study analyses the role that hard and soft infrastructure plays in attracting FDI inflows in the SADC region. As proxy for soft infrastructure, Internet users and governance indicators were used. Panel data was used for the analysis, for sixteen SADC member states, covering the period 2000 to 2018. Data was analysed using the multiple linear regression technique, applying the Random Effects Model. The results show that for soft infrastructure, government effectiveness (positive) and rule of law (negative) plays a vital and significant role in attracting FDI inflows into the SADC region. For hard infrastructure, telephone density and gross capital formation have a positive relationship with FDI. Soft infrastructure was found to be of more significance in attracting FDI inflows compared to hard infrastructure. Other variables, such as population growth rate, market size and trade openness were also found to have a significant relationship with FDI inflows in the SADC region. The study concludes that, although soft infrastructure plays a more significant role the two forms of infrastructure play a complimentary role in the attraction of FDI. To improve FDI inflows in SADC, the study recommended that SADC member states must dwell more on improving soft infrastructure, but also working on hard infrastructure development and making policies that attract FDI in the region. SADC countries should consider consolidating their policies towards both soft and hard infrastructures to obtain some form of convergence on infrastructural levels within the region. , Thesis (MA) -- Faculty of Business and Economic science, 2022
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- Date Issued: 2022-04
The effects of foreign direct investment on economic growth and human capital in vista countries
- Authors: Matitiba, Sandisiwe
- Date: 2021-04
- Subjects: Investments, Foreign , Economic development , Economics
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10948/51989 , vital:43410
- Description: The study examines the effects of Foreign Direct Investment (FDI) on economic growth and human capital in VISTA countries using time series and panel data analysis for the period 1990 to 2017. The Autoregressive Distributed Lag (ARDL) bound approach was applied in this study to examine the long-term relationships. The findings posited that there is a long-run relationship between economic growth, FDI, trade openness, capital formation, primary school enrolment, inflation over the period 1990 to 2017. The investigation of the long run and short run estimates results between FDI and economic growth indicated that FDI exhibited a positive effect on economic growth in Indonesia, while in Vietnam, South Africa, Turkey, and Argentina a negative relationship was established. Moreover, the findings of the panel data analysis showed that VISTA countries have been actively promoting policies and strategies that attract FDI to enhance economic growth. The study further incorporated the human capital results which indicated that FDI has a positive long-run relationship on human capital except for South Africa and Turkey. In the long run the results suggest that FDI has a negative effect on human capital only in Vietnam and Indonesia. Whereas, in the short run the results suggest that FDI has a negative effect on human capital only in Vietnam. The findings of the panel regression model carried out demonstrated that FDI exerts a positive and significant effect on human capital. It is evident that VISTA countries have made efforts to reform over the years, however, the spill over benefits of FDI are different from one country to another. Based on the empirical results acquired, even though it is advised that policy makers should intensify policies aimed at attracting FDI, policy makers must also give attention to other growth-enhancing factors such as human capital. , Thesis (MCom) -- Faculty of Business and Economic Sciences, Economics, 2021
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- Date Issued: 2021-04
Effects of exchange rate volatility on the stock market: a case study of South Africa
- Authors: Mlambo, Courage
- Date: 2013
- Subjects: Foreign exchange rates -- South Africa , Currency question -- South Africa , Free trade -- South Africa , Capital movements -- South Africa , Cointegration -- South Africa , Investments, Foreign , International trade , Stock exchanges -- South Africa , South Africa -- Economic policy
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11468 , http://hdl.handle.net/10353/d1007125 , Foreign exchange rates -- South Africa , Currency question -- South Africa , Free trade -- South Africa , Capital movements -- South Africa , Cointegration -- South Africa , Investments, Foreign , International trade , Stock exchanges -- South Africa , South Africa -- Economic policy
- Description: This study assessed the effects of currency volatility on the Johannesburg Stock Exchange. An evaluation of literature on exchange rate volatility and stock markets was conducted resulting into specification of an empirical model.The Generalised Autoregressive Conditional Heteroskedascity (1.1) (GARCH) model was used in establishing the relationship between exchange rate volatility and stock market performance. The study employed monthly South African data for the period 2000 – 2010. The data frequency selected ensured an adequate number of observations. A very weak relationship between currency volatility and the stock market was confirmed. The research finding is supported by previous studies. Prime overdraft rate and total mining production were found to have a negative impact on Market capitalisation. Surprisingly, US interest rates were found to have a positive impact on Market capitalisation. This study recommended that, since the South African stock market is not really exposed to the negative effects of currency volatility, government can use exchange rate as a policy tool to attract foreign portfolio investment. The weak relationship between currency volatility and the stock market suggests that the JSE can be marketed as a safe market for foreign investors. However, investors, bankers and portfolio managers still need to be vigilant in regard to the spillovers from the foreign exchange rate into the stock market. Although there is a weak relationship between rand volatility and the stock market in South Africa, this does not necessarily mean that investors and portfolio managers need not monitor the developments between these two variables.
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- Date Issued: 2013
Talent management by the East London IDZ to lever the competitive edge
- Authors: Swana, Leonard Sandile
- Date: 2011
- Subjects: Investments, Foreign , Ability -- Economic aspects -- South Africa -- East London
- Language: English
- Type: Thesis , Masters , MBA
- Identifier: vital:8795 , http://hdl.handle.net/10948/d1015982
- Description: Talent in the field of attraction of Foreign Direct Investment (FDI) is scarce in South Africa, especially in the Eastern Cape, due to the history of exclusion of South Africa from world economic participation, prior to 1994. In order for the ELIDZ to achieve its mandate of FDI attraction, job creation and economic growth, talent management has to be a key aspect in the boardroom discussions and strategic planning sessions. The purpose of this study is to investigate the effective use of talent management by the East London IDZ to leverage the competitive edge of the ELIDZ in the business of attracting Foreign Direct Investment into South Africa, and also of competing against the world’s Economic Processing Zones (EPZ’s) and Free Trade Zones (FTZ’s). According to Holbeche (2009:166), talent consists of those individuals who can make a difference to organisational performance, either through their immediate contribution, or, in the longer term, by demonstrating the highest level of potential. For the purpose of this study, talent management is defined as the systematic attraction, identification, development, engagement / retention and deployment of those individuals with high potential who are of particular value to an organisation. The literature reviewed pointed out very clearly that organisations that have properly developed, implemented and managed talent management strategies enjoy high levels of motivation, innovation and creativity, lesser levels of staff turn-over, high employee performance, superior productivity and mostly a competitive advantage in their league. The East London IDZ study response enjoyed a rate of 40 out of 54 employees who received questionnaires and returned them by the due date. The responses represented a total of 74.1 percent, and this level of response is attributed to the fact that by the end of May 2011, the ELIDZ had just undergone an Organisational Re-structuring. The current status quo of the ELIDZ, based on the views as reflected in this study ,is very compromising for an organisation that aims to compete in the global space for the attraction and retention of foreign direct investment (FDI’s), and the global competitiveness based on the talent available. The overall picture depicted by the empirical results suggests that there are critical gaps for which the ELIDZ Executive Management and Board need to craft solutions, if competitiveness is going to be taken seriously in the near and long-term future.
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- Date Issued: 2011