Faculty of Commerce, Law and Management (ETDs)

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    Economic and Institutional determinants of financial development for bank dominated and stock market-based economies in the SADC region
    (University of the Witwatersrand, Johannesburg, 2022) Mogale, Etumeleng; Mahonye, Nyasha
    The study examines the determinants of financial development from the bank-dominated economies (Angola, Lesotho and Madagascar) versus the bank and stock market-based economies’(Mauritius, Namibia and South Africa) point of view for the selected SADC countries. The study further examines which economies develop more over time between economies that are bank-dominated and those that have both the banking sector and the stock markets. Using a panel dataset that spans from 1996 to 2018 - which was sourced from the World Development Indicators (WDI) - the study utilized the Autoregressive Distributive lag (ARDL) techniques to separately model for the banking system and the stock market which allowed for the unpacking of any short-run and long-run contributors to the financial sector development and thus capture any possible links between the explanatory variables and the financial development proxies, domestic credit to the private sector and market capitalization. The study found that the banking sector development is influenced by GDP growth rate, foreign direct investment, governments debts, trade openness and the rule of law while the stock markets are largely driven by GDP growth rate, inflation, trade openness, rule of law and regulatory quality. Furthermore, the study found that the banking sector does benefit from the presence of stock markets and that over time economies with both financial sectors tend to develop more than bank-dominated economies and that they are less prone to external shocks. The contributions to the existing body of literature are by critically looking at the drivers or deterrents of financial development in the SADC region so that the appropriate policy prescriptions can be formulated and implemented with the broader view of closing the infrastructure gap that exists within the region. By separately modelling the two financial sectors the study was able to see indicators that are the driving force in each sector and which economies – bank-dominated vs stock market-based - tend to do well over time.
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    The effect of regulations on financial markets performance in Lesotho
    (2021) Mohloki, Thabang
    This paper unpacks the impact regulatory interventions on performance of the financial markets in Lesotho from 2009 to 2018 with the use of segmented regression analysis. The paper focuses on the impact of the 30% regulatory intervention imposed on insurance companies on performance of Lesotho financial systems. To ascertain financial markets performance, the study uses four measures of financial development being Broad Money; Liquid Liabilities of the Financial Sector; Outstanding Public Debt and Private Sector Credit as dependent variables. The study uses interrupted time series to evaluate dependant variables’ performance over time both prior and post the intervention. The study also assesses whether there are other determinants that may influence performance of financial markets. The findings demonstrate that the enforcement of the 30% local investment restriction had a positive impact on Broad Money; Liquid Liabilities of the Financial Sector and Outstanding Domestic Public Debt in Lesotho. The intervention did not however have an impact on Private Sector Credit. The findings further identifies Net International Reserves; Net Foreign Assets; Gross Domestic Product Growth; and Inflation as other determinants that significantly influence financial markets performance Lesotho.
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    The effect of regulations on financial markets performance in Lesotho
    (2021) Mohloki, Thabang
    This paper unpacks the impact regulatory interventions on performance of the financial markets in Lesotho from 2009 to 2018 with the use of segmented regression analysis. The paper focuses on the impact of the 30% regulatory intervention imposed on insurance companies on performance of Lesotho financial systems. To ascertain financial markets performance, the study uses four measures of financial development being Broad Money; Liquid Liabilities of the Financial Sector; Outstanding Public Debt and Private Sector Credit as dependent variables. The study uses interrupted time series to evaluate dependant variables’ performance over time both prior and post the intervention. The study also assesses whether there are other determinants that may influence performance of financial markets. The findings demonstrate that the enforcement of the 30% local investment restriction had a positive impact on Broad Money; Liquid Liabilities of the Financial Sector and Outstanding Domestic Public Debt in Lesotho. The intervention did not however have an impact on Private Sector Credit. The findings further identifies Net International Reserves; Net Foreign Assets; Gross Domestic Product Growth; and Inflation as other determinants that significantly influence financial markets performance Lesotho
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    Chinese stock market conditions and herd behaviour on the JSE: evidence from idiosyncratic volatile stock portfolios and industry sectors
    (2021) Bernstein, Shaun
    The intention of the study was to broaden the knowledge and understanding of herd mentality on the JSE 40. Herd behaviour has the potential to destabilise and deteriorate financial markets, and a better understanding of this behaviour could minimize investment loss. Therefore, the study examined herd behaviour in terms of various idiosyncratic volatile stocks and different industry sectors using a dispersion-based model. The study also investigated whether or not Chinese market conditions influenced herd behaviour regarding those stock portfolios. The results suggest that fully and partly diversified portfolios tend to show evidence of herd behaviour. However, Chinese market conditions affect each stock portfolio differently. For example, the Industrial Portfolio Index was influenced by Chinese market conditions across all tranquil and turbulent periods. Meanwhile, other portfolios were only influenced by long tranquil or extreme volatile periods in the Chinese market. Interestingly, the Banking sector was the only stock portfolio that was not influenced by the Chinese market. Perhaps investors can use this knowledge to enhance their future portfolio returns
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    Effects of the COVID-19 pandemic on the financial markets: a comparative analysis
    (2021) Kapalu, Njamba
    This paper investigates the effects of the COVID-19 pandemic on bond yields and stock returns. The paper examines how the coronavirus outbreak affected the performance of capital assets as well as what role financial contagion played in the evolution of asset prices over time. This paper employs an event study, a regression analysis, using both Ordinary Least Squares (OLS) and Generalised Method of Moments (GMM) estimations as well as a BEKK GARCH model to test for contagion. The research found that the flight-to-safety phenomenon was more prominent in emerging markets, whereas, in developed markets, bonds were not seen as the safe-haven assets and investors opted to invest in assets such as gold. The second event study showed that investors began reacting in anticipation of the of the Fed announcement in March to slash interest rates, showing herding behaviour rather that market efficiency was driving market behaviour during the pandemic. With regards to the effect of financial contagion being exhibited during the COVID-19 pandemic, the research had different findings for stock returns and bond yields. Using an MVGARCH BEKK model for the estimations, the research found that cross-market effects in the stock returns showed that the USA exhibited high unidirectional linkages with the other markets, thereby confirming significant effect of financial contagion in stock returns during the pandemic. With bond yields, however, no single country was found to be the source of the volatility