School of Economics and Finance (ETDs)

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A comparative analysis of the impact of Covid-19 and the global financial crisis on capital structure: Evidence from the Johannesburg Stock Exchange
(University of the Witwatersrand, Johannesburg, 2023) Mjeso, Thandiwe; Chipeta, Chimwemwe
Since Modigliani and Miller (1958) introduced the modern theory of capital structure, various studies have been conducted on capital structure. This study contributes to the existing capital structure literature by investigating how the Covid-19 pandemic impacted the capital structure of Johannesburg Stock Exchange (JSE) listed non-financial firms and comparing this impact to that of the 2008 global financial crisis. Furthermore, this study seeks to determine the relationship between capital structure and fundamental firm factors (business risk, profitability, firm size, growth, and asset tangibility). To conduct this analysis, the financial data of these firms for the 2005 to 2022 period is extracted from Bloomberg and the Generalized Method of Moments (GMM) model is used to conduct the analysis of this study. The results of this study indicate that Covid-19 did not have a statistically significant impact on the capital structure of the JSE listed non-financial firms whereas, the 2008 global financial crisis had a statistically significant impact. Overall, the results of this study are consistent with the empirical evidence reported by previous studies, and they provide evidence in support of both the trade-off theory and the pecking order theory
A discourse analysis of twitter posts on the perspectives of xenophobia in South Africa
(2022) Makhura, Busisiwe
Strained relations between locals and immigrants are a long-standing reality in South Africa and often we have seen it become a bloody battle resulting in the loss of life. However, over time we have seen these occurrences make a move into a different arena from (seemingly) purely physical contestations to open and continuous dialogue on public platforms such as social media. In exploring the thought patterns and processes of the participating individuals we believe we may find an explanation of their resultant actions and behaviour feedback into the greater belief systems in society- particularly xenophobic and anti-migrant ideals. Discourse Analysis on Twitter posts related to the #PutSouthAfricaFirst hashtag at two points in time during 2020/2021 is used to get insight into the underlying causes of this ongoing conflict. Sentiment analysis concludes as an attempt to gauge political influence and user sentiment on various themes that appear to be recurrent in these ongoing conversations.
A gendered analysis of labour market outcomes in South Africa during Covid-19: Evidence from the Quarterly Labour Force Survey
(University of the Witwatersrand, Johannesburg, 2023-06-22) Selman, Cheryl-Lyn; Casale, Daniela
The global financial crisis of 2008-2009 disproportionately affected men’s employment. As has been the case in previous economic slumps, industries like manufacturing which predominantly employed men, experienced deeper declines (Mosomi et al 2020). However, soon after the Covid-19 pandemic started spreading globally, early predictions were that women would be hit harder by the Covid-19 crisis than men, because of the kinds of sectors (i.e. industries) and jobs (i.e. less secure, part-time, not UIF registered etc.) in which women dominated (Alon et al 2020; Dingel and Neiman 2020; Joyce and Xu 2020, Mongey and Weinberg 2020; Mosomi et al 2020), and also because of their role in childcare. Growing empirical research suggested this was indeed the case. In addition, women’s employment was slower to recover than men’s as economies reopened (Mosomi et al 2020, Casale and Shepherd 2021), and pre-Covid inequalities had worsened (Casale and Shepherd 2021). The gender gap persisted, even once occupation fixed effects and the proportion of work-from-home tasks as well as education had been used to account for individual differences in workforces in the UK and US (Adams- Prassl et al 2020).
A Machine Learning Approach to Corporate Bankruptcy Prediction Using BERT-Based Sentiment Analysis
(University of the Witwatersrand, Johannesburg, 2023-03) Mhlambi, Lwazi Lungile; Seetharam, Yudhvir
The study of bankruptcy prediction has centred on whether firm level information is predictive. Seminal work by Altman (1968) articulates the failure of a business utilising its financial variables that are associated and classified in part to either the liquidity, profitability, solvency, leverage, or activity of a corporation. While this understanding is intuitive, recent studies have broadened the scope of financial ratios used in this prediction as well as incorporated exterior forces affecting the firm, either at an enterprise-wide or an economic-wide level to predict corporate bankruptcy. In the same breath, one cannot ignore the insider knowledge that the leaders and managers of firms would have leading to corporate bankruptcy. Therefore, this provides a curious opportunity in which we can incorporate the sentiment in the analysis provided by the leaders of such firms as an input in predicting the bankruptcy of a given firm. This study applies the Bidirectional Encoder Representations from Transformers (BERT) based sentiment analysis approach to import human sentiment as a variable from corporate disclosure data and apply it to existing corporate bankruptcy models over the period between 1995 to 2022 in South Africa, the United Kingdom and the United States of America
A study of gender differences in job finding strategies
(University of the Witswatersrand, Johannesburg, 2023-06-30) Ralefeta, Neo; Posel, Dorrit
Men and women in the South African labour market face different sets of challenges with women persistently having higher unemployment rates when compared to men. How they search for and find work is an important aspect of the country’s labour market and may inform policy solutions on how to address the large unemployment gaps between men and women. Active job searching is a costly exercise and individuals may use passive searching methods and rely on their social networks to connect them to job openings. This research report examines the differences in job finding strategies between adult men and women; it groups unemployed individuals into searching and non-searching categories and considers their individual and household characteristics. Using data from the National Income Dynamics study from years 2012 and 2014/2015, the study shows that there is a positive correlation between men’s search status and their employment outcomes. However, this is not the case for women whose employment outcomes are not influenced by whether they search for employment or not. For women, a negative correlation is found between social reproductive work and employment outcomes, and a positive correlation is found between educational attainment and employment outcomes. Social reproductive work hinders women more than men from actively searching for employment and being a female lowers the probability of finding employment. This research report contributes to the literature by providing a national analysis of gendered job searching strategies and employment outcomes by using recent nationally representative data.
A tale of tweets: the influence of Twitter on the technology sector
(2022) Eltringham, Bradley
Investor sentiment has emerged to be a very topical subject within the context of behavioural finance. In more recent times textual analysis has emerged to be one such way of attempting to quantify investor sentiment. This study utilises textual sentiment and attempts to examine the predictive power of social media networks with regard to the technology sector during the course of unprecedented market wide volatility as a consequence of a global pandemic. More specifically, this study analyses the association between tweet features (bullishness/sentiment , message volume and overall investor agreement ) and market features (daily trading volume, volatility and raw returns, closing price, intraday high, intraday low) with regard to the 10 current largest technology sector firms by market capitalisation. The study spans over the period of February 2016 to December 2021, which encompasses the COVID-19 pandemic. The first finding of this study indicates that most of the tweet features are observed to be contemporaneously associated to the stock returns of the ten biggest technology firms by market capitalisation. Second, the results show the that for the most part there is no monotonic relationship between tweet features and technology sector stock market returns with exception of the relationship between the magnitude of message agreement and stock returns. Third, there is no evidence that the past values of tweet features contain any useful information that could be used to predict future stock returns. Finally, by comparing the pre-COVID data and intra-COVID data, it is noted that for the most part there is no monotonic relationship between tweet features and technology sector stock market returns. There is however evidence that the use of increased usage of Twitter as an investment tool following an exogenous shock to the market.
Addressing the ‘new in the New Development Bank (NDB)’: a mission-oriented institution to finance the BRICS’ ecological transitions
(2022) Braga, João Pedro Loureiro
The New Development Bank (NDB) has not yet received the attention it deserves in the development community. As a multilateral development bank (MDB) established by the BRICS in 2014, its mission is to provide the basis for sustainable development cooperation supporting public and private projects through loans, guarantees and equity participation (BRICS 2015a). To address the research gap on the ‘new in the NDB’, this thesis analyses how the bank can position itself as a mission oriented institution to finance just ecological transition in the BRICS countries. The argument in favour of the NDB asserts that it is a demand-driven institution aiming to finance sustainable infrastructure. However, a critical assessment of this argument is needed to shed light on the challenges facing its green finance framework and address the ‘new in the NDB’. This means articulating an analytical framework that critically assesses the NDB’s engagement with sustainability and evaluates its claims of originality to materialise alternative sustainable development strategies for the BRICS countries. To do so, this thesis starts by reviewing the literature on the mission-oriented roles of development banks in climate finance to materialise sustainable development strategies for a just transition. This is followed by an empirical analysis of the BRICS challenge to finance sustainable infrastructure via the NDB, then an qualitative case-study assessment of the bank’s projects and its engagement with the country-specific challenges for a just ecological transition. The conclusions focus on opportunities to address the ‘new in the NDB’ and consolidate it as a full member of the development community by positioning it as a mission-oriented institution to co-finance the BRICS ecological transitions.
An application of a machine learning technique in microeconomics: using a neural network to enhance prediction in the service of estimation in the context of the South African child support grant
(2022) Wootton, Kyle
In this study, my aim is to show how machine learning can be used for prediction in the service of estimation in the context of a microeconomic research question: namely, whether the South African Child Support Grant (‘the grant’) improves the nutrition of children who receive it. Specifically, I show how a fully connected artificial neural network can be used as a novel, and potentially superior, approach to constructing an input variable in microeconomic research where the input variable is the result of high-dimension prediction. The hypothesis is that, if a neural network can be used to improve predictive performance when constructing the input variable, the estimation step that relies on this input as a covariate should also be more accurate. The input variable in question is caregiver motivation which is a covariate used as part of the identification strategy when determining the impact of the grant on nutrition. Caregiver motivation is constructed as the standardised difference between predicted application delay and actual application delay. Actual application delay is the number of days between the child becoming eligible for the grant and receiving the grant. Predicted application delay is the expected number of days between a child becoming eligible for the grant and receiving the grant given a set of observable characteristics. When comparing eligible children who receive the grant to eligible children who do not, I find the motivation variable constructed using a neural network results in the grant having a statistically significant impact on child nutrition – a result consistent with theoretical expectations and qualitative empirical evidence. In contrast, the motivation variable constructed using ordinary least squares (OLS) regression finds no statistically significant improvement in child nutrition from the grant – a result contrary to theoretical expectations and qualitative empirical evidence. As a result, I argue the neural network is a better predictor of application delay for the grant than the OLS regression.
An assessment of the determinants of IT entrepreneurs' level of awareness of the most common causes of start-ups failures in Johannesburg, South Africa
(University of the Witwatersrand, Johannesburg, 2023) Mkhavele, Nhlamulo
In South Africa, more than 70% to 80% of small to medium-sized businesses (SMMEs) fail within the first three years. In order to gain insight into the level of awareness of IT start-up entrepreneurs regarding the causes of SMME failure, this study conducted an empirical review of the literature and developed a hypothetical framework, the study builds on the work done by Justino Vicente on the factors influencing the failure of small enterprises in order to achieve its objective. It then makes recommendations for future research on the topic. In the aftermath of several economic adversities, prominent among them unemployment, poverty, and HIV and AIDS, SMME failure and success are key among national strategic concerns in the Republic of South Africa, where this study is being conducted in the Johannesburg region. The research employed a quantitative research methodology and the main instruments for gathering data was a survey/ questionnaire, and the snowball sampling method was used. 100 ICT start-ups owners and managers received surveys. The statistical package for the social sciences (SPSS) program was employed to analyse the quantitative data collected. Tables, pie charts, and bar charts were used to display the statistically descriptive results. Due to the many different reasons why SMMEs fail, this study focused its conclusions on the following factors: determinants of IT entrepreneurs' level of awareness of the most common causes of start-ups failures in Johannesburg, South Africa, determinants of accessibility to information of the most common causes of start-up failures and the willingness of entrepreneurs to consume information related to start-up failures were also presented. Among the results of failure include unemployment, societal ills, poverty, and loss of revenue. The study concludes by recommending various interventions to improve the level of awareness
An Essay on the Welfare and Growth Implication of the Energy Mix in the South African Economy
(University of the Witwatersrand, Johannesburg, 2023) Sesele, Masedi; Kutela, Gelo
This study investigated the welfare and growth implications of introducing renewable energy in South Africa’s energy mix. The investigation is divided into three chapters, providing a holistic analysis of climate change mitigation on developmental goals in South Africa. The first chapter determines the impact of the usage of non-renewable energy sources on selected sectors’ economic output in South Africa. The second chapter determines the pass-through effect and the response of consumer prices to renewable energy share increases in South Africa while using the exchange rate as a threshold. The third chapter determines through a natural experiment the impact of renewable energy policies such as the White Paper on the Energy Policy of the Republic of South Africa (1998), the White Paper on Renewable Energy Policy (2003) and the Integrated Resource Plan (2010) on South Africa’s economic growth by comparing the gross domestic product (GDP) growth path before and after the introduction of these policies. Results from the second chapter showed that coal was the least contributing factor to production for most sectors, showing that excessive coal usage may hinder economic output within the country. Petroleum has a positive and significant effect on the transport and agriculture sectors but has less of an effect on the other sectors. Electricity is a major contributing factor to production in some sectors, except for the industry sector, which may be adversely affected by the increasing electricity costs and constant load shedding in the country. Results from the third chapter showed that at an exchange rate threshold value of 7.7 R/$, the share of renewable energy pass-through to consumer prices is statistically significant below and above the threshold exchange rate value. When the exchange rate is above the threshold value, the pass- through effect is negative, indicating that an increase in the share of clean energy will decrease consumer prices. These results are largely attributed to the cost of renewable energy, which has been declining significantly in periods where the exchange rate was above the threshold value and, as a result, it had a negative pass-through effect on consumer prices. Results from the fourth chapter showed that each of the three green energy policies has a positive impact on the GDP, which shows that implementing renewable energy policies in South Africa has not only resulted in generating clean, renewable energy but also fosters economic growth within the country. Using a natural experiment, the study constructed a synthetic GDP growth path that vi would have been in place had there been no renewable energy intervention and compared it with the current GDP growth path post the intervention of renewable energy policy to identify the causal positive impact of green energy on economic growth. This thesis’ results encourage policymakers to further implement and improve renewable energy policies as the share of clean energy within South Africa’s energy mix not only mitigates climate change by decreasing greenhouse gas emissions but also positively affects economic growth by creating a clean ecosystem, job creation, increasing innovation and capital formation and overall improving total factor productivity in South Africa and the standard of living of ordinary South Africans
An impact assessment of India's job guarantee: exploring the gap between theory and practice
(2022) Torma, Clara
In capitalist economies, unemployment has always been a structural and unresolved problem. In this sense, the study of employment policies represents a contribution to addressing this issue. The Job Guarantee (JG) is a public option for jobs that offers employment opportunities to every citizen ready, willing, and able to work. Focusing on further exploring the JG, this research is structured in two pillars. First, to examine and systematise the theory and underlying impacts of the JG proposition advocated by Pavlina Tcherneva, Randall Wray, and other authors from the Keynesian tradition. Second, to study in detail a real-world JG experience: its context, impacts and challenges, being able to grasp to what extent it corresponds to the theoretically expected impacts of a JG implementation. The Indian case was selected since the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) can be considered one of the largest and most ambitious employment generation programmes in the world. The assessment of MGNREGA’s performance reveals it is still far from what is expected from a JG in the theory. Its performance certainly leaves a lot of room for improvement. More investment in the infrastructure of poor localities is needed to expand the programme’s socioeconomic transformative power in the wages level, unemployment reduction, poverty alleviation, inequalities easing and well-being
An investigation of the relationship between ICT infrastructure and economic growth of emerging market
(University of the Witwatersrand, Johannesburg, 2023-02) Jiang, Jun Wen; Fasanya, Ismail
The study examines the link between Information and Communication Technology, institutional quality, and economic growth in emerging markets over the period of 2000 to 2019, using the system Generalized Method of Moments. The connection between economic growth and technology lies on the framework of exogenous growth model. The following findings are discernible from the study. First, a substantial positive relationship exists between internet usage and economic growth, while a negative association between economic growth and fixed telephone users is evident. Second, a positive association between growth and innovation exist in emerging markets, whilst institutions reveal a negative association. These findings have a significant policy implication for policymakers to monitor innovation factors rather than institutional quality to bypass the digital divide. Consequently, policymakers should pay attention to the benefits of Information and Communication technology usage by means of reducing entries cost whilst improving network facilities transfers
An overview of corporate income tax in South Africa
(2022) Ramsunder, Julita
This paper investigates the corporate income tax regime in South Africa in order to determine if it has a comparatively high cost corporate tax regime compared to other jurisdictions. The paper also explores the relationship between corporate income tax and investment, as a higher tax cost relative to other jurisdictions is likely to discourage investment in South Africa. The paper uses three different measures to compare South Africa to other jurisdictions namely: the statutory rate, the backward effective rate and the forward effective rate. South Africa has a relatively high statutory rate, forward and backward effective tax rate which suggests the country imposes a higher corporate income tax cost compared to other jurisdictions in the sample. In South Africa, economic growth is key for driving both corporate tax collections and investment, where certain studies suggest that economic conditions are far more important than the tax structure for investment decisions. Further studies are required to fully unpack the investment and tax regime relationship in South Africa.
Analysis of cultural identity mix within Chinese banks operating in South Africa
(University of the Witwatersrand, Johannesburg, 2023-04) Mongalo, Theodora Thandekile; Volker, Cordelia
Banking in South Africa has evolved with the internationalisations of banks over the years. As at 31 December 2021, there were 31 banks operating in South Africa. Of these, 13 were local branches of foreign banks, employing both home and host country nationals. The blend of nationalities in these banks results in a cultural mix. The aim of the study is to understand structural consensus in a setting that has a cultural mix. The structural consensus theory states that socialisation within a setting is guided by rules and behaviour, and these form the culture in the setting. To understand this, the researcher analysed the cultural identity mix in a Chinese bank operating in South Africa, guided by the work- related cultural dimensions used in studies of cross cultures. The cultural dimensions were applied to communication, conflict management, decision making, leadership and employee satisfaction. The study followed a deductive approach, on a single case study which allowed the researcher deep engagement with participants. Qualitative data was collected by way of semi-structured interviews from participants, representative of the cultural identity mix in the case. Focus was on understanding how cultural values affect communication, conflict and conflict management, decision making and leadership support. The aim of the researcher was to verify whether the assumption in the literature on cultural dimensions hold, in the selectedcase and how / if there is cultural consensus and social consensus. The data collected was analysed through the application of Colaizzi’s strategy, a data analysis method that allows for exhaustive approach to understanding the everyday lived experience in a social setting. The study reveals some similarities and some differences in the cultural values and beliefs of Chinese and South Africans. The two national cultures were found to display different values when communicating. These differences create barriers to social order. The cultural identity mix further displayed conflicting values in their approach to conflict and conflict management. The adopted values to conflict and conflict management are those of the Chinese culture and this creates an illusion of social order. Hierarchy was found to play an important role in decision making and involvement in the decision making process. Both cultures displayed respect for hierarchy and therefore there was social order when it comes to decision and decision making. Leadership and the support they offer was situational and supported the theory that states that leaders create a culture within an organisation. The outcomes of the study will contribute to existing literature and close gaps in existing literature. The first contribution is that culture is innate, secondly cultural dimensions can be partially used to explain cultural values, but they necessarily reflect the values of individuals. The study also provides support that culture is learnt and this results in tools for cultural and social consensus where there is a cultural identity mix. Another contribution of the study is the understanding of the Chinese and South African national culture, and emphasis on the strong cultural values of Confucianism for Chinese and Ubuntu for South Africans. Future research is recommended to focus on limitations of the study which include a replication of the study on a different population in order to add to the dependability and credibility of the results. Another recommendation is for a study that distinguishes between the various sub- cultures within the blanket South African culture
Analysis of tax relief measures as a result of the covid-19 pandemic in south africa, compared with the tax measures of other members of the brics group
(University of the Witswatersrand, Johannesburg, 2023) Selemela, Elsie; Ram, Asheer J.
The purpose of this report is to analyse tax relief measures that were taken as a result of the COVID-19 outbreak in South Africa, evaluate the approach taken and compare it with other countries in the BRICS international organisation. The COVID-19 pandemic caused numerous company closures and employment losses (IMF, 2020). Governments worldwide had to intervene to support their citizens and keep businesses afloat (IMF, 2020). In order to maintain widespread access to essential goods and services, taxation is crucial (IMF, 2020). The dire effect on economic activities around the world influenced tax laws (IMF, 2020). It fell to tax administrators to ease the tax burden on taxpayers as they were facing hardships (OECD [Organisation for Economic Co operations and Development], 2020). The International Monetary Fund (IMF) states that the design of tax systems can help stabilise economies when faced with crisis (IMF, 2020). The South African government implemented tax relief measures because of COVID-19, although taxpayers are still experiencing the detrimental effects of COVID-19. It is the government’s wish to offer additional help to businesses and individuals who are still facing these hardships and also assist in rebuilding businesses (SARS, 2021). This report will look at tax measures that were taken by South Africa in comparison to those that were taken by Brazil, Russia, India and China to determine the usefulness of these measures in dealing with the effects of COVID-19 on taxes. Some measures were introduced for a short time and therefore are no longer applicable, but it is important to consider them in this report because they might have long-term effects on taxes. The findings of this analysis indicate which measures were used, when they were implemented, and how taxes in the BRICS countries changed while adjusting to COVID-19. It was found that tax policies put in place in South Africa were unjustified since they decreased tax collection without any measures in place to boost it (IMF, 2020). Examining what other BRICS nations were doing to increase tax collection during the COVID-19 outbreak can help identify areas for improvement.
Anxious Vigilance – An investigation of the relationship between Optimal Managerial Ownership and Firm Value on the JSE
(University of the Witwatersrand, Johannesburg, 2022) Muhlarhi , Tiniso Willie; Seetharam, Yudhvir
Managerial ownership has been advanced as a more effective corporate governance mechanism in minimising agency related costs by aligning the interests of managers with those of shareholders. This study examines the effects of equity ownership, using different ownership groups, on firm value of firms listed in the South African stock exchange to ascertain whether equity ownership results in well governed firms with higher firm value over the period of 2010 to 2020. The results are largely consistent with those in emerging markets, the results document that there is no statistically significant direct relationship between equity ownership and firm value. M ore so deviations from optimal equity ownership, both below and above optimal equity ownership, does not reduce firm value. The results also show that a portfolio of ownership firms (which refers to firms in which CEOs, the Executive Team, and Insiders (general employees) have equity ownership in the firm) outperforms a portfolio of non-ownership firms over the period 2015-2020, this aspect is more consistent to results reported in developed markets. Overall, managerial ownership does not appear to be an effective mechanism to aligning interest of shareholders and their managers in the South African landscape, other alternatives such as debt are proposed
Assessing alternative monetary policy frameworks and instruments in selected African economies
(2017) Chiumia, Austin Belewa
This thesis contains three core chapters that assess the performance of alternative monetary policy frameworks and instruments in stabilizing 10 selected African economies. Literature and practice show that Advanced Economies (AEs) and Emerging Market Economies (EMEs) are mostly adopting the ination targeting (IT) framework. This framework relies on active use of the interest rate as a policy instrument for macroeconomic stabilisation. Di⁄erent from AEs and EMEs, the majority of African countries are characterized by low nancial market development, frequent supply shocks and volatile terms of trade. These features impede the e¢ ciency of the IT framework and the interest rate instrument. Supply shocks imply that ination is not only demand driven. Volatile terms of trade translate into excessive exchange rate uctuations. Due to these factors, policy practice in Africa remains largely divergent from the global trend. Authorities still rely on monetary aggregate targeting (MAT) with de facto managed exchange rates. However, the MAT framework is also failing to stabilize economies. This follows instability of the key factors, such as the money demand, upon which the framework is anchored. Furthermore, controlling exchange rate movements is a challenge due to weak balance of payments positions. It is not surprising, therefore, that the majority of African economies still remain in the grip of macroeconomic instability. Ination and GDP targets are rarely met and they also remain volatile. The perverse macroeconomic features and the perceived failure of the MAT regime have necessitated the search for alternative monetary frameworks and instruments. In this study, we join the search by specically focussing on three questions. First, given the macroeconomic landscape in Africa, what is the relative performance of the interest rate vis--vis the monetary aggregate as instru ments for macroeconomic stabilization? Secondly, how do these instruments perform when apart from ination and output stabilization, monetary policy also engages in smoothing exchange rate uctuations? Thirdly, what is the relative performance of ination targeting vis--vis nominal GDP targeting as alternative monetary policy regimes for macroeconomic stabilization in African economies? Although the success of monetary policy largely relies on appropriate conguration of monetary policy frameworks and instruments, answers to these questions remain controversial and scanty for African economies. In order to address these questions, we formulate a New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model. In this model, money is non-separable from consumption in the utility function. We estimate the model using the Maximum Likelihood method with quarterly data mostly from 1990 to 2014. The data is obtained from the International Financial Statistics (IFS). The thesis has ve chapters. Chapter 1 is the general background to the research problem. Chapters 2, 3 and 4 are distinct but related core chapters addressing three specic research questions. Chapter 5 is the conclusion. In Chapter 2, we compare the performance of the monetary aggregate and the interest rate as alternative instruments for stabilizing ination and output in 10 selected countries. Results show that the monetary aggregate is superior in stabilizing 5 economies. In the other 5 countries, it is the interest rate instrument which performs better. In the former group of countries, the monetary aggregate plays a relatively large role in macroeconomic dynamics while in the latter the interest rate is more signicant. These results partly reect di⁄erences in nancial market development between the two groups of countries. Overall, we nd a weak role of the interest rate compared to the monetary aggregate in driving aggregate demand dynamics. The exchange rate is also found to be a key driver of macroeconomic dynamics. Our re v sults suggest three things: First, authorities in Africa need to be cautious of a blanket adoption of the interest rate as a sole monetary policy instrument. Second, authorities will nd it di¢ cult to stabilize economies using the interest rate based frameworks. Third, exchange rate stability is key to macroeconomic stability in Africa. In Chapter 3, we extend the authoritiesobjective function. In addition to minimizing ination and output volatility, authorities also use the interest rate or money supply rules to smooth exchange rate uctuations. The results show that macroeconomic performance is enhanced when authorities smooth exchange rate uctuations in 4 of the 10 countries. The gains from exchange rate smoothing mostly arise from a reduction in ination and exchange rate volatility but not fromoutput. In the other 6 countries, exchange rate smoothing worsens macroeconomic performance. These results reect the fact that the exchange rate exerts a relatively large inuence in macroeconomic dynamics in the rst group of countries compared to the latter. Exchange rate smoothing therefore minimizes the pass-through of the exchange uctuations to ination and output leading to better performance. Overall, the ndings suggest that exchange rate smoothing is harmful in Africa. Where exchange rate smoothing delivers gains, appropriate thresholdsofsmoothingneedtobeobservedtoavoidpolicyinducedmacroeconomic instability. Authorities should also smooth temporal rather that structural shifts in the exchange rate level. In Chapter 4, we compare the performance of ination targeting (IT) vis-vis nominal GDP targeting (NGDPT) as alternative monetary policy frameworks for macroeconomic stabilization. We examine the strict and exible versions of these policy regimes. We also include a hybrid regime which combines elements of IT and NGDPT. Results show that the hybrid regime performs better in 5 countries. In the other 4 countries, it is the strict ination targeting that performs better. In 1 country, exible ination tar vi geting is optimal. The results also reveal that demand shocks dominate but are closely trailed by supply and exchange rate shocks in explaining macroeconomic uctuations. The multiplicity of signicant shocks is key in explaining the dominance of the hybrid regime. The hybrid regime successfully handles shocks that can neither be optimally handled by the IT regime nor the NGDPT regime alone. These results have several implications. First, demand management alone is insu¢ cient to stabilize African economies. Second, identifying dominant shocks is critical for choosing robust monetary policy regimes. Third, the multiplicity of signicant shocks implies that choosing monetary policy frameworks and hence macroeconomic management process is more complex for African policy makers. Overall, the results have several policy implications which are outlined in Chapter 5. First, they suggest a cautious approach towards generalized adoption of the interest rate over the monetary aggregate as a monetary policy instrument in African economies. This contradicts the current wave of monetary policy changes sweeping across African countries. Secondly, the signicanceoftheexchangeraterenderscredencetoexchangeratesmoothing in Africa. The ndings, however, suggest that exchange rate smoothing can either enhance or worsen macroeconomic performance. Where it enhances macroeconomic performance, authorities must carefully consider the thresholds of smoothing to avoid creating macroeconomic instability. Authorities need not ght structural shifts in exchange rates levels through smoothing. This would help to preserve the shock absorbing role of the exchange rate. Finally, the prevalence of demand, supply as well as exchange rate shocks makes the hybrid monetary policy regime which combines elements of IT regime as well as NGDPT regime to perform relatively better in stabilizing the majority of the economies. Given the multiplicity of shocks, authorities inAfricaneedtocomplementdemandmanagementwithpoliciesthataddress supply side and exchange rate bottlenecks to ensure sustainable macroeco vii nomic stability. Overall, the ndings suggest that there is scope to improve monetary policy performance in Africa by adopting suitable frameworks and instruments. The results also highlight the problem of tackling monetary policy issues with a "one size ts all" approach.
Assessing State Capacity in South African Industrial Policy Design and Implementation in a Changing Global Landscape
(University of the Witwatersrand, Johannesburg, 2022) Diale, Rapula Comfort; Nkunzi, Sibulele
South Africa has sought to transform and reindustrialise its economy. Through its industrial policy, it has intervened in several manufacturing sub-sectors. Despite the numerous state interventions, the South African manufacturing sector continues to deteriorate. The shorting comings of industrial policy have raised fresh questions of whether the Department of Trade Industry and Competition (DTIC) and the state, including its private sector partners, have sufficient capacity to design and implement appropriate industrial policy. This paper aims to assess state capacity in South African industrial policy design and implementation. In so doing, it analyses developmental economic literature, including the Weberian state, the developmental state, the human capacity theory and the bureaucratic rationale theory. The evidence for this research was collected through interviews with key stakeholders in the industrial policy, including thought leaders, policy researchers, policymakers, and academics. The paper finds that to achieve successful policy intervention; the country needs to develop supportive institutions and systems in industrial policy across government departments and different spheres of government. It further argues that the state outsourcing policy research capacity, if used correctly, can be developmental; however, the incorrect usage of outsourced capacity is detrimental to state capacity
Associations between economic preferences and behavioural health intentions among young adults living in an informal settlement
(University of the Witwatersrand, Johannesburg, 2023-03) Andrady, Wayne Jude; Booysen, Frikkie
The emergence of non-communicable diseases in South Africa, most notably among the urban poor, is resulting in an increased burden of diseases. Since NCDs can develop in distinct periods of the life course, post-adolescence-intentions to engage in health behaviours need to be investigated. Furthermore, there is consistent evidence that health behaviours are associated with economic preferences. Yet, it is unclear whether economic preferences are also associated with behavioural health intentions. Objectives: The study aims to examine how risk-taking and patience are associated with behavioural health intentions among young adults in a poor informal urban settlement in South Africa. The study also explores whether there are gender differences in behavioural health intentions and whether these economic preferences contribute to gender gaps in behavioural health intentions. Data and Methods: The study utilized secondary survey data collected from a sample of 240 young adults using a structured questionnaire. The study collected data on behavioural intentions for seven health- protective and health-harming behaviours. Risk-taking and patience are measured using qualitative, quantitative and combined measures from the Global Preference Survey. Ordered probit and seemingly unrelated regression models were estimated and t-tests were employed to quantify gender gaps, followed by the Blinder-Oaxaca decomposition analysis. Findings The study reveals that economic preferences have a moderate association with behavioural health intentions among young adults. However, these results seem contradictory to priori expectations and further research is required. Our findings emphasize the importance of recognizing and addressing the limitations associated with imperfect measures of economic preferences when investigating their association with health behavioural intentions
Bank regulation, cross-border banking and interest rate pass- through in Sub-Saharan Africa
(University of the Witwatersrand, Johannesburg, 2023-03) Gondwe, Sopani; Mahonye, Nyasha
The thesis comprises five interrelated chapters that seek to advance empirical literature on banking and financial sector stability (risk) by focusing on some salient regulatory and monetary issues of policy relevance and interest to developing countries of Sub-Saharan Africa (SSA). The market structure and regulatory environment in which banks operate in SSA have significantly changed over the last two decades, and the banking systems of a number of countries have also markedly grown during this period. For instance, and especially after the global financial crisis (GFC), supervisory authorities in most countries introduced new regulations, and/or in some cases, enhanced their existing bank regulatory frameworks to conform with international best practice and standards. However, questions have been raised as to whether developing countries like those in SSA need to adopt international regulatory standards indiscriminately – and whether the benefits arising from the adoption of such policies or standards outweigh the costs. At the same time, the SSA region has witnessed significant penetration of foreign banks – a development that has heightened the risk of financial contagion and cross-border spill over effects. In most countries, there have also been considerable changes in the design and implementation of monetary policy over the past two decades. These changes have triggered a considerable debate on whether and how regulatory and structural factors in the financial system impede or facilitate monetary policy transmission – a debate that, as yet, is not fully settled. This study interrogates the above issues by focussing on three related questions. First, how do regulations – that are based on international best practice and standards, impact or shape risk- taking behaviour (i.e. stability) of banks in SSA? Second, what are the banking sector stability implications of increased foreign bank penetration in the host countries? Finally, how does competition and capital regulation affect the transmission of monetary policy to commercial banks’ lending and deposit rates i.e. the interest rate pass-through (IRPT) in SSA? In addressing each question, the study applied panel econometric analyses using bank and country-level data. The data was obtained from various sources, namely; Bankfocus database, the World Bank Regulatory and Supervision Surveys (BRSSs), IMF International Financial Statistics (IFS), IMF Financial Soundness Indicators (FSIs), World Bank Governance Indicators (WBGIs), Global Financial Development Database (GFDD, 2019), and The Heritage Foundation.

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