School of Economics and Finance (ETDs)

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    Oil Price Shocks and Financial Stress in Sub-Saharan African Countries
    (University of the Witwatersrand, Johannesburg, 2024) Frost, Callum
    This study examines the nexus between financial stability and oil shocks within South Africa, a net-oil importer, and Nigeria, a net-oil exporter. A signal theory approach utilising pAUROC analysis is used to capture relevant indicators. Furthermore, sub-market indices are weighted using a diagonal BEKK-GARCH model, allowing for time-varying cross-correlations to determine sub-market weights, allowing the constructed financial stress index (FSI) for each economy to focus on systemic events of financial stress. The FSI for each economy is then incorporated into a SVAR model which disaggregates oil demand shocks into three components (economic activity, oil consumption demand, and oil inventory demand) following the framework of Baumeister and Hamilton (2019) to capture the effects of oil market shocks on financial stability. This paper finds that positive shocks to oil supply, economic activity, and oil inventory demand tend to reduce financial stress in South Africa. Interestingly, demand driven increases in the real price of oil reduces systemic stress, even though the economy is a net-oil importer. Oil supply shocks and economic activity shocks tend to have no significant effect on Nigerian financial stress while demand driven increases to real oil prices tend to decrease financial stress. Interestingly, shock increases in demand for oil inventories tends to raise financial stress.
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    House Prices Against the Wind: Analysis of the use of Monetary Policy to Moderate House Price Bubbles and the Case of New Zealand
    (University of the Witwatersrand, Johannesburg, 2024) Jinabhai, Nikhil; Creamer, Kenneth
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    The price effects of a hospital merger: a case study of the Mediclinic Southern Africa (Pty) Limited (Mediclinic) and Matlosana Medical Health Services (Pty) Limited (MMHS) merger
    (University of the Witwatersrand, Johannesburg, 2024) Laurence, Marcelle; Mncube, Liberty
    This study evaluates the assessment conducted in the prohibited Mediclinic Southern Africa (Pty) Ltd and Matlosana Medical Health Services (Pty) Ltd (MMHS) proposed merger. The study employs a qualitative approach, centred on a case study methodology, to assess the theories of harm discussed. It aims to provide insights into the adequacy and outcome of the competition authorities’ assessment drawing comparisons to international literature and policy implications. It uses economic theory to analyse and show the significance of robust and nuanced regulatory frameworks in healthcare merger evaluation.
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    Multidimensional measure of energy poverty in Lesotho
    (University of the Witwatersrand, Johannesburg, 2024) Lehema, Nthati ‘Mabatho; Ye, Yuxiang
    This study employs the Alkire-Foster methodology to assess multidimensional energy poverty in Lesotho, using data from the Household Energy Consumption Survey in Lesotho. The investigation considers three dimensions, cooking, lighting, and water heating in constructing the multidimensional energy poverty index. In terms of the three dimensions, the overall findings indicate that at the national level, approximately 61% of the households experience multidimensional energy poverty. Upon decomposing the Multidimensional Energy Poverty Index (MEPI) by the settlement type, the results indicate that 83.50% of the households in rural areas are multidimensionally energy poor while 51.20% of the peri-urban households are deprived. In the urban areas, only 19% of the households experience energy poverty. In decomposing the MEPI by the gender of the household head, the results demonstrate that around 59.40% of female-headed households exhibit multidimensional energy poverty than their male-headed counterparts with 54.40%, with an average intensity of 91% of the weighted indicators. Decomposition by districts reveals that Butha-Buthe, Mokhotlong, Qacha, and Thaba-Tseka have over 80% of the multidimensionally poor households. Additionally, the study highlights the prevalence of traditional cooking fuels in rural areas, with minimal reliance on electricity. This pattern shifts with urbanization, where traditional fuel consumption decreases.
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    Examining the relationship between governance and gross fixed capital formation in Sub-Saharan Africa
    (University of the Witwatersrand, Johannesburg, 2024) Machobani, Dennis; Mahonye, Nyasha
    This study delves into the intricate relationship between governance and Gross Fixed Capital Formation (GFCF) in Sub-Saharan Africa (SSA), aiming to address the substantial infrastructure deficit in the region. Employing the System GMM methodology, the primary research question focuses on understanding the correlation between institutions and GFCF in SSA. Subsequent sub-questions delve into the relationships between political stability and GFCF, as well as the composite index of institutions and GFCF. Policy recommendations highlight the pivotal role of good governance, advocating for reforms, institution strengthening, and enhanced transparency. The study's outcomes emphasize the intricate interplay of diverse factors impacting GFCF, prompting policymakers to adopt comprehensive strategies for sustainable development. Persistent effects of past investment choices underscore the necessity for continuous efforts to incentivize investment. Key determinants such as trade policies, current account balances, gross domestic savings, and government expenditure are identified, suggesting targeted interventions to stimulate private sector engagement and cultivate an environment conducive to heightened investment in Sub-Saharan Africa.
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    Determinants of optimal capital structure for non-financial firms listed on the JSE
    (University of the Witwatersrand, Johannesburg, 2024) Chipeta, Chimwemwe
    This paper investigates the determinants of optimal capital structure while considering the influence of the cost of capital, specifically examining the relationship between firm-specific variables known to drive optimal capital structure (such as firm size, asset tangibility, growth, liquidity, and profitability) and the cost of capital. The analysis of these determinants in developing countries is intriguing due to the differences in firm characteristics compared to those in advanced economies. The study utilizes primary data sourced from Refinitiv Workspace for 189 firms across various sectors listed on the Johannesburg Stock Exchange (JSE) from 2015 to 2023, excluding financial services and insurance sectors. Panel econometric approaches, including Feasible Generalised Least Squares (FGLS) and the Generalised Method of Moments (GMM) regression method, are employed for analysis. The findings of the study unveil several noteworthy relationships between independent variables and the Weighted Average Cost of Capital (WACC). Firm size, profitability, asset tangibility, and growth emerge as key determinants affecting WACC to varying degrees. Firm size and profitability exhibit positive associations with WACC, supported by statistically significant coefficients. This implies that increases in firm size and profitability correspond to higher WACC levels. Conversely, asset tangibility and growth demonstrate negative correlations with WACC, backed by statistically significant coefficients. Furthermore, firm size and profitability maintain their positive relationships with WACC across various estimation models, including Feasible Generalized Least Squares (FGLS) and Generalized Method of Moments (GMM). This consistency underscores the robustness of these relationships, with larger and more profitable firms consistently exhibiting higher WACC.
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    Measuring the performance and asset allocation of robo-advisors in BRICS
    (University of the Witwatersrand, Johannesburg, 2024) Maluleke, Lethabo; Seetharam, Yudhvir
    The financial industry has undergone some digital changes over the past decade. Financial technology (FinTech) is a result of this digital change and robo-advisors constitute FinTech in the wealth management space. The emergence of robo-advisors is a global phenomenon and, in this study, the performance and asset allocation of the robo-advisors from Brazil, Russia, India, China, and South Africa (BRICS) were measured. BRICS countries are one of the largest growing economies and provide international investors with diversification. The purpose of this study was to analyse if the recommended portfolios of the robo-advisor can perform similar to a benchmark and to explain the performance differences between the different recommended portfolios of the robo-advisors from each country using a returns-based style analysis. Furthermore, this study analysed the performance of robo-advisors before and after considering fees and the returns-based style analysis was also used to capture the exposure of each robo-advisor to mutually exclusive asset classes. The data included four robo-advisors in total with one robo-advisor from each country (a total of 62 portfolios) as there was a removal of the Russian EFTs due to the Russian- Ukraine war of 2022. The sample period was from 2015 to 2022 as most robo-advisors only became available after 2015. The performance tests that were performed were the Sharpe ratio, Jensen’s alpha, Treynor ratio and Manipulation-proof performance measure. It is found that there are certain countries that have robo-advisors with portfolios that perform similar to the benchmark and do not outperform the benchmark and other countries that have portfolios that outperform the benchmark and the portfolios do not perform similar to the benchmark. Furthermore, it is found that performance differences can be explained by the investment style i.e., whether the portfolios have exposure to the same assets. The performance differences can also be explained by asset allocation in each portfolio based on uncorrelated assets.
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    South Africa’s Rural Development Strategy, its Application and Theoretical Underpinnings: using the application of the CRDP at Muyexe Village as a Reflector
    (University of the Witwatersrand, Johannesburg, 2024) Manganyi, Kenneth; Lange, Jérôme
    Rural development in South Africa has been a key component of economic strategy since 1994. However, evaluation by both the government and outside actors reveals limited success in set targets. Integrated development, sustainability and community participation have been its key concepts, with land reform, infrastructure investment, skills development, provision of necessities and job creation as some of its important tools. The CRDP was piloted at Muyexe Village in 2009, a period when South Africa was still reeling from the GEAR strategy. As a contribution to the continuous assessment, this report is an enquiry about the content of the rural development programme and its application, and how these have been influenced by the theoretical underpinnings of the country’s macroeconomic policy choices. Reflecting on the Muyexe CRDP pilot, the report explores the theoretical anchoring of South Africa’s rural development strategy, design, and implementation. This is done by evaluating the literature on economic development, academic and official publications on South Africa’s post-apartheid macroeconomic posture, documentation on the design and implementation of the rural development programme and a case study at Muyexe village with information also collected from participants in the CRDP pilot projects, government officials and leaders of comparative communities using questionnaires, interviews and observations.
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    Pass Laws and social reproduction: A reading of the 1956 women’s march and its aftermath
    (University of the Witwatersrand, Johannesburg, 2024) Mashele, Rixongile; Ponniah, Ujithra
    This thesis historically locates the experiences of ‘ordinary’ women in the context of restricted urban mobility, poor labour conditions, the disruption of family life and the pass system. Using archives and social reproduction as a conceptual lens, this research establishes that ‘ordinary’ black women knew what they were protesting for in 1956, that they understood the state’s efforts of consciously manipulating the costs of social reproduction, and its direct impact on their daily lives. They also understood that the experiences of men and women under apartheid were not the same. Importantly, these women utilised womanhood to fight against the apartheid state in their attempts of ensuring that African children receive access to resources and privileges equivalent to those of white children.
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    A Decomposition Analysis of Gender Disparities in Need and Unmet Need for Care and Support in Urban Gauteng
    (University of the Witwatersrand, Johannesburg, 2024) Lusanda Mhlahlo, Siphesihle; Booysen, Frederik
    Gender inequalities are a pervasive issue with far-reaching effects across all aspects of society, including the economy. This study delves into gender health disparities, specifically focusing on need and unmet need for care and support. Using data from the Gauteng Quality of Life Survey of 2020/2021, the study employs logistic regressions and a decomposition model to analyse the prevalence of need and unmet need, and how these differ across sex. The findings of this study highlight a higher prevalence of need among women, with employment emerging as the most significant factor contributing to the gender gap in need. Equalizing employment levels between men and women could potentially reduce the gender difference in need by 15%. Additionally, the study identifies a self-reported history of intimate partner violence (IPV) as a key contributor to gender disparities in need, suggesting that reducing the prevalence of IPV among women to match that of men would help narrow the gender gap. Furthermore, the study reveals a greater prevalence of unmet need among men, once again linking a self-reported history of IPV to this disparity. These findings shed light on the complex interplay of gender, health, and societal factors, emphasizing the importance of addressing gender inequalities in healthcare and support systems.