The contribution of financial development to economic growth in BRICS countries
- Authors: Ruzive, Tafadzwa Mutsvedu
- Date: 2020-12
- Subjects: Economic development -- BRIC countries , BRIC countries -- Economic conditions
- Language: English
- Type: Doctorate's theses , text
- Identifier: http://hdl.handle.net/10948/57501 , vital:58028
- Description: Finance is a driver of growth, but only up to a certain extent. The debate about the influence of financial development on economic growth has been ongoing for more than a century. Since Schumpeter (1912) wrote about the happenings on Lombard Street, right up to the economists of today, there is growing interest in how financial development affects economic activity and hence economic growth. With economic growth gaining prominence in respect of development discourse, an inquiry into the finance-growth nexus has grown rapidly. The latest advances of the finance-growth nexus show a positive relationship between financial development and economic growth. However, in the face of recent financial crises and recessions, the validity of this conclusion has been put into doubt. In this regard, little research has been done globally pertaining to the limits of finance as a driver of growth globally, and within BRICS economies in particular. This research investigates the limits of the influence of financial development on economic growth in BRICS countries. Utilising indices of financial development in Panel Smooth Transition Regressions (PSTR), thresholds to the influence of finance on economic growth are identified for the stock market, the banking sector and financial inclusion initiatives undertaken in BRICS countries. The study found that economic growth is negatively related to stock market development at both low and high levels of stock market development; banking sector development is positively related to economic growth and total factor productivity at both low and high levels of banking sector development. Financial inclusion is positively related to economic growth at low levels of its development. This relationship becomes negative as financial inclusion initiatives grow larger. In a nutshell, stock market development should be pursued as a secondary economic growth policy, banking sector development should be spearheaded as a primary growth strategy. Financial Inclusion should be pursued as a primary growth driver until it reaches a point where it begins to detract from growth. The thresholds and speeds of transitions between low and high levels of financial development indicators should be considered as financial development targets and sequencing inputs for regional financial policy development in BRICS countries. , Thesis (PhD) -- Faculty of Business and Economic Sciences, 2020
- Full Text:
- Date Issued: 2020-12
- Authors: Ruzive, Tafadzwa Mutsvedu
- Date: 2020-12
- Subjects: Economic development -- BRIC countries , BRIC countries -- Economic conditions
- Language: English
- Type: Doctorate's theses , text
- Identifier: http://hdl.handle.net/10948/57501 , vital:58028
- Description: Finance is a driver of growth, but only up to a certain extent. The debate about the influence of financial development on economic growth has been ongoing for more than a century. Since Schumpeter (1912) wrote about the happenings on Lombard Street, right up to the economists of today, there is growing interest in how financial development affects economic activity and hence economic growth. With economic growth gaining prominence in respect of development discourse, an inquiry into the finance-growth nexus has grown rapidly. The latest advances of the finance-growth nexus show a positive relationship between financial development and economic growth. However, in the face of recent financial crises and recessions, the validity of this conclusion has been put into doubt. In this regard, little research has been done globally pertaining to the limits of finance as a driver of growth globally, and within BRICS economies in particular. This research investigates the limits of the influence of financial development on economic growth in BRICS countries. Utilising indices of financial development in Panel Smooth Transition Regressions (PSTR), thresholds to the influence of finance on economic growth are identified for the stock market, the banking sector and financial inclusion initiatives undertaken in BRICS countries. The study found that economic growth is negatively related to stock market development at both low and high levels of stock market development; banking sector development is positively related to economic growth and total factor productivity at both low and high levels of banking sector development. Financial inclusion is positively related to economic growth at low levels of its development. This relationship becomes negative as financial inclusion initiatives grow larger. In a nutshell, stock market development should be pursued as a secondary economic growth policy, banking sector development should be spearheaded as a primary growth strategy. Financial Inclusion should be pursued as a primary growth driver until it reaches a point where it begins to detract from growth. The thresholds and speeds of transitions between low and high levels of financial development indicators should be considered as financial development targets and sequencing inputs for regional financial policy development in BRICS countries. , Thesis (PhD) -- Faculty of Business and Economic Sciences, 2020
- Full Text:
- Date Issued: 2020-12
The determinants of economic growth in BRICS Countries
- Authors: Nyirenda, Chimwemwe
- Date: 2019
- Subjects: Economic development -- BRIC countries , BRIC countries -- Economic conditions
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/42946 , vital:36713
- Description: One of the key goals of the formation of BRICS (Brazil, Russia, India, China and South Africa) was to promote stability in trade and investment which would boost growth as the five BRICS countries recovered from the 2009 global financial crisis. This however has not been the case for all BRICS countries where only certain members have experienced a substantial increase in growth while others have experienced declining growth rates. The objective of this study was to analyse the determinants of economic growth in BRICS countries in order to investigate the causes of growth rates varying amongst the BRICS economies. This paper considered various economic theories for proximate and fundamental determinants of growth which included: The Harrod-Domar model, The Neoclassical Growth Theory, The Endogenous Growth Model, The New Growth Theory, Institutions and Economic Growth, Democracy, The Quality of Governance and Growth, Finance and Growth, Trade and Economic Growth and lastly Financial Openness and Growth. The study was conducted for a period covering from 1995 to 2016 and made use of the Autoregressive Distributed Lag (ARDL) model for the single-country analysis and Pooled Mean Group (PMG) was used for the panel analysis. In the single-country analysis, the descriptive statistics indicated that individually all of the BRICS members on average experienced positive GDP growth, positive investment (capital formation) and trade openness between 1995 to 2016. The single-country analysis made use of the ARDL Bounds test to investigate cointegration in each country and a long-run relationship was established in all BRICS countries except for China. The augmented Solow model was extended to incorporate both proximate and fundamental determinants of growth. The estimated results for the ARDL model found that capital and trade openness were significant in determining GDP growth for all of the BRICS countries except for China. FDI was insignificant in determining growth in BRICS countries except for India and the remaining variables gave mixed results between the countries. The error correction term (ECT) was significant and negative in all of the BRICS countries (except for China) which indicated that there was convergence. In the panel analysis, a long-run relationship was established using the KAO Residual cointegration test. The panel correlations test for BRICS revealed that GDP growth had a positive correlation with all the variables under analysis except for inflation which was in line with the anticipated correlations. The PMG estimated results for BRICS found that the proximate determinants (capital and labour) were both significant in determining growth in the long-run where capital had a positive relationship and labour had a negative relationship with growth. Trade openness, inflation and FDI were significant in determining growth in the long-run, though government expenditure was insignificant in determining growth. The error correction term for BRICS illustrated that there was convergence and 92% of the disequilibrium in the short-run is corrected each year. The analysis revealed that BRICS economies should adopt more policies that encourage domestic investment and trade in order to boost growth. Policies such as relaxing local corporation taxes can encourage domestic investment which will aid local businesses in competing against foreign competition. Countries such as Brazil, India and South Africa can adopt more policies that encourage the development and growth of SMME’s. An area for future research would be to incorporate a location variable into the fundamental determinants of growth where the analysis could be conducted per region in each of the BRICS countries, which would give a broader view on which regions are determining growth in BRICS countries.
- Full Text:
- Date Issued: 2019
- Authors: Nyirenda, Chimwemwe
- Date: 2019
- Subjects: Economic development -- BRIC countries , BRIC countries -- Economic conditions
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/42946 , vital:36713
- Description: One of the key goals of the formation of BRICS (Brazil, Russia, India, China and South Africa) was to promote stability in trade and investment which would boost growth as the five BRICS countries recovered from the 2009 global financial crisis. This however has not been the case for all BRICS countries where only certain members have experienced a substantial increase in growth while others have experienced declining growth rates. The objective of this study was to analyse the determinants of economic growth in BRICS countries in order to investigate the causes of growth rates varying amongst the BRICS economies. This paper considered various economic theories for proximate and fundamental determinants of growth which included: The Harrod-Domar model, The Neoclassical Growth Theory, The Endogenous Growth Model, The New Growth Theory, Institutions and Economic Growth, Democracy, The Quality of Governance and Growth, Finance and Growth, Trade and Economic Growth and lastly Financial Openness and Growth. The study was conducted for a period covering from 1995 to 2016 and made use of the Autoregressive Distributed Lag (ARDL) model for the single-country analysis and Pooled Mean Group (PMG) was used for the panel analysis. In the single-country analysis, the descriptive statistics indicated that individually all of the BRICS members on average experienced positive GDP growth, positive investment (capital formation) and trade openness between 1995 to 2016. The single-country analysis made use of the ARDL Bounds test to investigate cointegration in each country and a long-run relationship was established in all BRICS countries except for China. The augmented Solow model was extended to incorporate both proximate and fundamental determinants of growth. The estimated results for the ARDL model found that capital and trade openness were significant in determining GDP growth for all of the BRICS countries except for China. FDI was insignificant in determining growth in BRICS countries except for India and the remaining variables gave mixed results between the countries. The error correction term (ECT) was significant and negative in all of the BRICS countries (except for China) which indicated that there was convergence. In the panel analysis, a long-run relationship was established using the KAO Residual cointegration test. The panel correlations test for BRICS revealed that GDP growth had a positive correlation with all the variables under analysis except for inflation which was in line with the anticipated correlations. The PMG estimated results for BRICS found that the proximate determinants (capital and labour) were both significant in determining growth in the long-run where capital had a positive relationship and labour had a negative relationship with growth. Trade openness, inflation and FDI were significant in determining growth in the long-run, though government expenditure was insignificant in determining growth. The error correction term for BRICS illustrated that there was convergence and 92% of the disequilibrium in the short-run is corrected each year. The analysis revealed that BRICS economies should adopt more policies that encourage domestic investment and trade in order to boost growth. Policies such as relaxing local corporation taxes can encourage domestic investment which will aid local businesses in competing against foreign competition. Countries such as Brazil, India and South Africa can adopt more policies that encourage the development and growth of SMME’s. An area for future research would be to incorporate a location variable into the fundamental determinants of growth where the analysis could be conducted per region in each of the BRICS countries, which would give a broader view on which regions are determining growth in BRICS countries.
- Full Text:
- Date Issued: 2019
The determinants of credit default swap spreads in emerging market economies
- Authors: Matakane, Lwazi
- Date: 2017
- Subjects: Bank loans -- BRIC countries , Risk management -- BRIC countries , Swaps (Finance) -- BRIC countries , BRIC countries -- Economic conditions , Rating agencies (Finance)
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/7142 , vital:21221
- Description: Emerging markets have become a destination for international portfolio flows as a result of global financial integration. This has allowed exogenous factors like sentiment and developed country monetary policy to affect developing countries capital markets and macroeconomic fundamentals. This study analyses the impact of investor sentiment alongside US monetary policy, country specific risks, inflation and domestic stock returns on the BRICS credit default spreads. To investigate this relationship, the study uses panel data and a fixed effects model. The results of the panel regressions suggest that all variables had an impact on the variation of BRICS credit default spreads however the crisis may have distorted the relationship among the variables. Sovereign ratings had an inverse relationship depicting a rise in ratings decreasing the credit default premium. This was in line with a priori expectations. Domestic company earnings also had an inverse relationship with BRCIS credit default premia, the magnitude of which is dependent on the value of the index. This is to say the higher the index, the more significant the effect on the BRICS default premium. US monetary policy was significant and in line with expectations of a linear relationship between emerging market credit default spreads when controlling for the crisis. In the crisis period however, results depicted an inverse relationship going against a priori expectations. The inflation variable was found to have a greater impact on CDS spreads during the crisis period, while the VIX index had a linear relationship with the default premia albeit the impact was not highly significant. The study concludes that the financial crisis was an important event that affected the relationship of these variables with BRICS country default spreads and had read through to market participant’s behaviour at the time.
- Full Text:
- Date Issued: 2017
- Authors: Matakane, Lwazi
- Date: 2017
- Subjects: Bank loans -- BRIC countries , Risk management -- BRIC countries , Swaps (Finance) -- BRIC countries , BRIC countries -- Economic conditions , Rating agencies (Finance)
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/7142 , vital:21221
- Description: Emerging markets have become a destination for international portfolio flows as a result of global financial integration. This has allowed exogenous factors like sentiment and developed country monetary policy to affect developing countries capital markets and macroeconomic fundamentals. This study analyses the impact of investor sentiment alongside US monetary policy, country specific risks, inflation and domestic stock returns on the BRICS credit default spreads. To investigate this relationship, the study uses panel data and a fixed effects model. The results of the panel regressions suggest that all variables had an impact on the variation of BRICS credit default spreads however the crisis may have distorted the relationship among the variables. Sovereign ratings had an inverse relationship depicting a rise in ratings decreasing the credit default premium. This was in line with a priori expectations. Domestic company earnings also had an inverse relationship with BRCIS credit default premia, the magnitude of which is dependent on the value of the index. This is to say the higher the index, the more significant the effect on the BRICS default premium. US monetary policy was significant and in line with expectations of a linear relationship between emerging market credit default spreads when controlling for the crisis. In the crisis period however, results depicted an inverse relationship going against a priori expectations. The inflation variable was found to have a greater impact on CDS spreads during the crisis period, while the VIX index had a linear relationship with the default premia albeit the impact was not highly significant. The study concludes that the financial crisis was an important event that affected the relationship of these variables with BRICS country default spreads and had read through to market participant’s behaviour at the time.
- Full Text:
- Date Issued: 2017
Causal layered analysis of South Africa's inclusion in BRICS
- Maliti, Viwe Anda Ntombikayise
- Authors: Maliti, Viwe Anda Ntombikayise
- Subjects: South Africa -- Foreign economic relations , BRIC countries -- Foreign economic relations , BRIC countries -- Economic conditions
- Language: English
- Type: Thesis , Masters , MBA
- Identifier: vital:8922 , http://hdl.handle.net/10948/d1021123
- Description: This treatise is undertaken with the purpose of investigating, through the application of the critical futures technique, causal layered analysis (CLA), the case for South Africa’s inclusion in the BRICS alliance. CLA is explored as a technique that allows for the creation of transformative knowledge which contextualises our reality, enabling techniques for exploring different alternatives that lead to outcomes. In an attempt to understand the unique features that underscore these emerging economies and why they are considered the engines behind global economic growth, the member states’ economies are systematically deconstructed. By analysing key economic variables, strengths and weaknesses, CLA allows for the development of conclusive narratives regarding the legitimacy of all BRICS economies. This study discusses the motivation for the formation of this alliance and its role in the global economy. It demonstrates and sorts out the different views concerning its dreams and aspirations. The all-inclusive nature of CLA allows for the consideration of a wide range of perspectives that seek to clarify motives behind the convergence of the BRICS economies to form an alliance. South Africa’s membership is assessed, using both the economic and political schools of thought. On a balance of a number of dominant views, considered valid, that either support or reject the inclusion of South Africa, this study demonstrates that whether or not it belongs amongst the major emerging countries is an absurd question. It thus proposes that a pertinent question to ask is one that explores ways in which South Africa can effectively capitalise on its BRICS membership to drive its own economic growth.
- Full Text:
- Authors: Maliti, Viwe Anda Ntombikayise
- Subjects: South Africa -- Foreign economic relations , BRIC countries -- Foreign economic relations , BRIC countries -- Economic conditions
- Language: English
- Type: Thesis , Masters , MBA
- Identifier: vital:8922 , http://hdl.handle.net/10948/d1021123
- Description: This treatise is undertaken with the purpose of investigating, through the application of the critical futures technique, causal layered analysis (CLA), the case for South Africa’s inclusion in the BRICS alliance. CLA is explored as a technique that allows for the creation of transformative knowledge which contextualises our reality, enabling techniques for exploring different alternatives that lead to outcomes. In an attempt to understand the unique features that underscore these emerging economies and why they are considered the engines behind global economic growth, the member states’ economies are systematically deconstructed. By analysing key economic variables, strengths and weaknesses, CLA allows for the development of conclusive narratives regarding the legitimacy of all BRICS economies. This study discusses the motivation for the formation of this alliance and its role in the global economy. It demonstrates and sorts out the different views concerning its dreams and aspirations. The all-inclusive nature of CLA allows for the consideration of a wide range of perspectives that seek to clarify motives behind the convergence of the BRICS economies to form an alliance. South Africa’s membership is assessed, using both the economic and political schools of thought. On a balance of a number of dominant views, considered valid, that either support or reject the inclusion of South Africa, this study demonstrates that whether or not it belongs amongst the major emerging countries is an absurd question. It thus proposes that a pertinent question to ask is one that explores ways in which South Africa can effectively capitalise on its BRICS membership to drive its own economic growth.
- Full Text:
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