The analysis of the impact of financial integration on financial development and economic growth in the Southern African development community
- Ndlovu, Nomusa https://orcid.org/0000-0001-7777-2939
- Authors: Ndlovu, Nomusa https://orcid.org/0000-0001-7777-2939
- Date: 2023-11
- Subjects: Economic development -- Finance -- Africa, Southern , Financial services industry -- Africa, Southern
- Language: English
- Type: Doctoral theses , text
- Identifier: http://hdl.handle.net/10353/28650 , vital:74491
- Description: The study investigated the impact of financial integration on financial development and economic growth in the Southern African Development Community using annual data for the period 2000 to 2018. Literature shows that there is no universally accepted measure of financial integration hence the study utilized the Lane and Milesi-Ferretti measure, foreign direct investment as a percentage of GDP and Chinn-Ito (KAOPEN) index in achieving the objectives of the study. One of the main objectives of the study was to examine the impact of financial integration on financial development in the SADC community. The study utilized first difference GMM to achieve this objective and the results showed that Lane and Milesi-Ferretti measure and foreign direct investment as a percentage of GDP significantly affect financial development whilst Chinn-Ito (KAOPEN) index displayed an insignificant effect. The next step was to investigate the impact of financial integration on economic growth in the SADC region. To accomplish this objective, the study investigated both the direct channel as well as the possibility of financial integration indirectly influencing economic growth through financial development, trade openness, and institutional quality. The Three Stage Least Squares (3SLS) technique was utilized on a system of five simultaneous equations in examining the effect of financial integration on economic growth. The results revealed that financial integration affects economic growth both directly and indirectly. Regarding the indirect channels, only the financial development and institutional quality channel proved to be significant. To ensure the robustness of the results the study checked if the impact of financial integration was sensitive to the measure of financial integration and financial development used. The study employed KAOPEN to proxy financial integration while broad money supply (% of GDP) measured financial development. Robustness results confirmed that financial integration affects economic growth both directly and indirectly. This time, the trade openness channel was significant at 10% which shows the benefits through this channel are significant. This shows that the results of the trade openness channel are inconclusive. When the Lane and Milesi-Ferretti measure of financial integration was employed the impact of the trade openness channel was insignificant whilst a significant impact was found based on KAOPEN. The inconclusive findings for the trade openness channel may indicate the impact of financial integration on economic growth depends on the proxy of financial integration utilized. In addition, the study also gathered some interesting results where financial development, institutional quality, trade openness, and government size (government spending) are significant drivers of financial integration. The study makes some fundamental contributions to literature on financial integration, financial development, and economic growth. Initially, the study provides empirical evidence on the nature of the impact of financial integration on financial development in the SADC. In particular, this study contributes to the body of knowledge by showing that the impact of financial integration on financial development is linear. Secondly, this study makes an original contribution to the literature on the channels through which financial integration affect economic growth in the SADC, providing a more subtlety understanding of the mechanisms at play. Finally, the study provides important policy implications for policymakers and financial regulators in the SADC who seek to promote economic growth through financial integration. The findings of the study imply that deeper financial integration is crucial in the SADC region as it can potentially increase the rate of economic growth in the region. Not only economic growth will be boosted but also the institutional quality and the development of the financial sector of the countries in the region. Based on these findings, the study recommends that the governments of the member countries in the region continue to come up with policies that boost regional and international financial integration. The study suggests that to ensure that they continuously reap positive benefits from financial integration, member countries of the SADC should appoint a board that deals with implementation and accountability. This board must be responsible for ensuring that member countries implement the formulated policies and should also hold member countries accountable in case of failure to implement the formulated policies. Since the region is pursuing financial integration, the region must come up with policies that prioritize domestic developments in the form of financial development, improving domestic institutional quality and reducing trade restrictions in advance in order to ensure that preconditions for financial integration are met. Developing these will attract different forms of financial flows or increase financial openness which will ultimately boost economic growth. , Thesis (PhD) -- Faculty of Management and Commerce, 2023
- Full Text:
- Date Issued: 2023-11
- Authors: Ndlovu, Nomusa https://orcid.org/0000-0001-7777-2939
- Date: 2023-11
- Subjects: Economic development -- Finance -- Africa, Southern , Financial services industry -- Africa, Southern
- Language: English
- Type: Doctoral theses , text
- Identifier: http://hdl.handle.net/10353/28650 , vital:74491
- Description: The study investigated the impact of financial integration on financial development and economic growth in the Southern African Development Community using annual data for the period 2000 to 2018. Literature shows that there is no universally accepted measure of financial integration hence the study utilized the Lane and Milesi-Ferretti measure, foreign direct investment as a percentage of GDP and Chinn-Ito (KAOPEN) index in achieving the objectives of the study. One of the main objectives of the study was to examine the impact of financial integration on financial development in the SADC community. The study utilized first difference GMM to achieve this objective and the results showed that Lane and Milesi-Ferretti measure and foreign direct investment as a percentage of GDP significantly affect financial development whilst Chinn-Ito (KAOPEN) index displayed an insignificant effect. The next step was to investigate the impact of financial integration on economic growth in the SADC region. To accomplish this objective, the study investigated both the direct channel as well as the possibility of financial integration indirectly influencing economic growth through financial development, trade openness, and institutional quality. The Three Stage Least Squares (3SLS) technique was utilized on a system of five simultaneous equations in examining the effect of financial integration on economic growth. The results revealed that financial integration affects economic growth both directly and indirectly. Regarding the indirect channels, only the financial development and institutional quality channel proved to be significant. To ensure the robustness of the results the study checked if the impact of financial integration was sensitive to the measure of financial integration and financial development used. The study employed KAOPEN to proxy financial integration while broad money supply (% of GDP) measured financial development. Robustness results confirmed that financial integration affects economic growth both directly and indirectly. This time, the trade openness channel was significant at 10% which shows the benefits through this channel are significant. This shows that the results of the trade openness channel are inconclusive. When the Lane and Milesi-Ferretti measure of financial integration was employed the impact of the trade openness channel was insignificant whilst a significant impact was found based on KAOPEN. The inconclusive findings for the trade openness channel may indicate the impact of financial integration on economic growth depends on the proxy of financial integration utilized. In addition, the study also gathered some interesting results where financial development, institutional quality, trade openness, and government size (government spending) are significant drivers of financial integration. The study makes some fundamental contributions to literature on financial integration, financial development, and economic growth. Initially, the study provides empirical evidence on the nature of the impact of financial integration on financial development in the SADC. In particular, this study contributes to the body of knowledge by showing that the impact of financial integration on financial development is linear. Secondly, this study makes an original contribution to the literature on the channels through which financial integration affect economic growth in the SADC, providing a more subtlety understanding of the mechanisms at play. Finally, the study provides important policy implications for policymakers and financial regulators in the SADC who seek to promote economic growth through financial integration. The findings of the study imply that deeper financial integration is crucial in the SADC region as it can potentially increase the rate of economic growth in the region. Not only economic growth will be boosted but also the institutional quality and the development of the financial sector of the countries in the region. Based on these findings, the study recommends that the governments of the member countries in the region continue to come up with policies that boost regional and international financial integration. The study suggests that to ensure that they continuously reap positive benefits from financial integration, member countries of the SADC should appoint a board that deals with implementation and accountability. This board must be responsible for ensuring that member countries implement the formulated policies and should also hold member countries accountable in case of failure to implement the formulated policies. Since the region is pursuing financial integration, the region must come up with policies that prioritize domestic developments in the form of financial development, improving domestic institutional quality and reducing trade restrictions in advance in order to ensure that preconditions for financial integration are met. Developing these will attract different forms of financial flows or increase financial openness which will ultimately boost economic growth. , Thesis (PhD) -- Faculty of Management and Commerce, 2023
- Full Text:
- Date Issued: 2023-11
Financial sector development, financial innovation and economic growth: case of a selected SADC countries
- Mpukumpa, Siphosethu https://orcid.org/0000-0001-7342-8751
- Authors: Mpukumpa, Siphosethu https://orcid.org/0000-0001-7342-8751
- Date: 2023-04
- Subjects: Financial services industry -- Africa, Southern , Investments -- Africa, Southern , Economic development -- Africa, Southern
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/26852 , vital:66036
- Description: The financial sector plays a pivotal role in an economy of a country; hence the importance of financial sector development cannot be underestimated. Financial sector development is widely regarded as another conduit through which financial innovation and economic growth can be alleviated. The study firstly empirically examines the effect of financial sector development on financial innovation and also the impact of financial sector development and financial innovation on economic growth in selected Southern African Development Community (SADC) countries, employing the Generalized Method of Moments (GMM) technique for the period 1990 to 2020. Empirical results revealed that financial sector development overall does have an impact on financial innovation in the selected SADC countries. And also, financial sector development together with financial innovation does have an impact on economic growth in the selected SADC countries. However, on the relationship between financial system stability, financial innovation and economic growth, results reveal that a stable financial system is beneficial to new technological advancement and improved economic growth. Therefore, the overall findings from the study indicate that financial access or financial inclusion and financial stability is what increases financial innovation and boosts economic growth instead of mere financial sector development at a broader level. , Thesis (MCom) -- Faculty of Management and Commerce, 2023
- Full Text:
- Date Issued: 2023-04
- Authors: Mpukumpa, Siphosethu https://orcid.org/0000-0001-7342-8751
- Date: 2023-04
- Subjects: Financial services industry -- Africa, Southern , Investments -- Africa, Southern , Economic development -- Africa, Southern
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/26852 , vital:66036
- Description: The financial sector plays a pivotal role in an economy of a country; hence the importance of financial sector development cannot be underestimated. Financial sector development is widely regarded as another conduit through which financial innovation and economic growth can be alleviated. The study firstly empirically examines the effect of financial sector development on financial innovation and also the impact of financial sector development and financial innovation on economic growth in selected Southern African Development Community (SADC) countries, employing the Generalized Method of Moments (GMM) technique for the period 1990 to 2020. Empirical results revealed that financial sector development overall does have an impact on financial innovation in the selected SADC countries. And also, financial sector development together with financial innovation does have an impact on economic growth in the selected SADC countries. However, on the relationship between financial system stability, financial innovation and economic growth, results reveal that a stable financial system is beneficial to new technological advancement and improved economic growth. Therefore, the overall findings from the study indicate that financial access or financial inclusion and financial stability is what increases financial innovation and boosts economic growth instead of mere financial sector development at a broader level. , Thesis (MCom) -- Faculty of Management and Commerce, 2023
- Full Text:
- Date Issued: 2023-04
The nexus between capital inflows, financial sector development and domestic investment in selected southern African development community countries
- Zulani, Sihle https://orcid.org/0009-0006-7067-5793
- Authors: Zulani, Sihle https://orcid.org/0009-0006-7067-5793
- Date: 2023-03
- Subjects: Capital movements -- Africa, Southern , Saving and investment -- Africa, Southern , Financial services industry -- Africa, Southern
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/28872 , vital:75154
- Description: The study seeks to examine the nexus between foreign capital inflows as proxied by foreign direct investment and overseas development assistance, financial sector development as measured by domestic credit to private sector and broad money supply (M3) and domestic investment [gross fixed capital formation] in selected Southern African Development Community (SADC) countries. Panel data model, specifically the panel Autoregressive Distributed Lag technique given the order of integration of the variables utilised in the study was employed from 1980 to 2019. The results revealed that there is cointegration among the variables utilised. After confirming cointegration, the long-run and short run models were estimated to establish the relationship between the variables. The long-run results revealed that about 67% of domestic investment in the SADC region is generated through foreign direct investment. These results suggest that domestic investment is boosted by foreign direct investment in the SADC region. However, financial sector development was found to have a negative effect on domestic investment in the SADC region. The findings from this study suggest that countries should pursue policies aimed at attracting FDI into the SADC region given the positive effect it has on investment. On the part of financial sector development, this could be attributed to the sector not supporting most of the domestic investment given that most of them are small and do not access bank finance. , Thesis (MCom) -- Faculty of Management and Commerce, 2023
- Full Text:
- Date Issued: 2023-03
- Authors: Zulani, Sihle https://orcid.org/0009-0006-7067-5793
- Date: 2023-03
- Subjects: Capital movements -- Africa, Southern , Saving and investment -- Africa, Southern , Financial services industry -- Africa, Southern
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/28872 , vital:75154
- Description: The study seeks to examine the nexus between foreign capital inflows as proxied by foreign direct investment and overseas development assistance, financial sector development as measured by domestic credit to private sector and broad money supply (M3) and domestic investment [gross fixed capital formation] in selected Southern African Development Community (SADC) countries. Panel data model, specifically the panel Autoregressive Distributed Lag technique given the order of integration of the variables utilised in the study was employed from 1980 to 2019. The results revealed that there is cointegration among the variables utilised. After confirming cointegration, the long-run and short run models were estimated to establish the relationship between the variables. The long-run results revealed that about 67% of domestic investment in the SADC region is generated through foreign direct investment. These results suggest that domestic investment is boosted by foreign direct investment in the SADC region. However, financial sector development was found to have a negative effect on domestic investment in the SADC region. The findings from this study suggest that countries should pursue policies aimed at attracting FDI into the SADC region given the positive effect it has on investment. On the part of financial sector development, this could be attributed to the sector not supporting most of the domestic investment given that most of them are small and do not access bank finance. , Thesis (MCom) -- Faculty of Management and Commerce, 2023
- Full Text:
- Date Issued: 2023-03
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