Wits Business School (ETDs)
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Item Oil prices, stock prices and the economy: examining volatility transmission in developing African countries(2021) Sibanyoni, Sylvia LindiweThe dependency of stock prices on the oil price volatility has been found to be more prevalent in emerging market net-oil importing countries. Most African countries are net-oil importer and the effect of the oil price volatility has significant impact on their economies. To answer the objectives of this study, this research employs the diagonal BEKK GARCH model, GMM model and the VECM over data from selected African countries from July 2003 – November 2019. The results from the diagonal BEKK Model suggests a co-movement between oil price volatility and stock price volatility does not appear to be directly linked to geography or economic relations between the sample countries due to financial globalization and integration. There is evidence of increased volatility during and after the 2007/08 crisis financial, with volatility more pronounced in the after math of the crisis. In examining the effects of the oil price volatility on the economic growth, the GMM results show that oil price and stock prices volatility have negative impacts on the economic growth. The empirical findings from the VECM suggest that a significant negative long run relationship between oil price volatility and economic growth exists. Furthermore, the results also indicate that oil price volatility is transmitted to the economy through the exchange rates, real interest rates, consumer price indices (rate of inflation) and the volatility of stock market returns. Finally, the pairwise Granger causality test indicate a uni-directional cause and effect that runs from oil price volatility to economic growth through stock price volatilityItem Relationship between financial deepening and economic growth for selected countries in Africa(2020) Musiyazviriyo, TafadzwaThe financial sectors of African countries are still underdeveloped relative to other regions, and there is little academic research on how this can be improved. Given the potential for economic growth, fuelled by further financial sector development, the call is for African policymakers to prioritise financial deepening policies to stimulate economic growth. The purpose of the study was to investigate the relationship between financial deepening and economic growth in 51 African countries. This research sought to achieve three objectives: (i) whether financial depth for the African countries between 1993 and 2017 had a significant impact on economic growth; (ii) whether the effect is positive or negative; and (iii) determining the size of the effect. The assumption was that financial depth in the African countries positively influences economic growth. The study also sought to ascertain whether the direction of causality is unidirectional or bi-directional. This study assumed that the direction of causality is bi-directional. Using the two-step generalised methods of moments (GMM), the study assessed the relationship between financial deepening and economic growth in 51 African countries from 1993 to 2017. The findings reveal that there is a significant negative relationship between financial deepening and economic growth. The Granger causality tests applied further show that there is a bi-directional relationship between financial deepening and economic growth. The main conclusion from the study is that there is a multidimensional approach opportunity for African countries to develop their financial sectors further to stimulate economic growth. Possible interventions in policy can be to create an environment that aims to encourage either a demand-following and/or a supply-leading approach to financial sector development. Both strategies will result in financial deepening and may stimulate economic growth since there is a bi-directional relationship between financial deepening and economic growth.