School of Economics and Finance (ETDs)

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    Is there a financial Kuznets curve for South Africa?
    (University of the Witwatersrand, Johannesburg, 2023-02-28) Basitere, Louisa Maria; Mondi, Lumkile
    This research report analyses the impact of financial sector development on Income inequality in South Africa for the period 1990 - 2021. The research report employs the Autoregressive Distributed Lag (ARDL) using data sourced from the South African Reserve Bank (SARB) and the World Inequality Database. The report finds that there is no evidence of a financial Kuznets curve for South Africa for the period of the study. The report adds to the sparse literature on the nexus between financial sector development and income equality in South Africa by using an index formulated using Principal Component Analysis (PCA) as a proxy for financial sector development and considering the impact of Social protection expenditure. Social protection expenditure, mostly in the form of cash social grants, is used the by South African government as one of the levers to address income inequality in the country
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    Financial sector development and economic growth in South Africa: role of the banking sector
    (2022) Monareng, Kabelo Precious
    This “study examines effects of the efficiency of the financial sector on economic growth in South Africa through an augmented Solow-Swan growth model using annual data from 1975 to 2020. The financial sector development is characterised by the role of the banking sector in enhancing growth through the productive use of a country’s stock of financial capital. In this study, autoregressive distributed lag (ARDL) and instrumental variable (IV) models are used to estimate the derived augmented financial sector induced growth regressions. The ARDL method observes a positive but insignificant effect of financial sector development on economic growth. However, using internal instruments, instrumental variable regression provides joint endogeneity between regressors. The IV estimation results show that financial sector development has a significant positive effect on economic growth, hence, increased efficiency in the banking sector can lead to enhanced growth. In addition, the results observe that the quality of institutions are crucial to the relationship between financial sector and economic growth. To this end, policymakers should continue to improve financial inclusion and the quality of institutions, which could potentially spur economic growth in South Africa.