The Movement of Exchange Rate and Expected Income: Case of South Africa

Many studies have investigated the impact of expectations on the exchange rates. However, it remains a challenge linking the exchange rates to its fundamentals. This study seeks to determine the impact of expectations of future income on the exchange rates behaviour. In this study, we employ the Bayesian VAR method. The study finds that the expectations of income have effects on the exchange rate behaviour. Furthermore, the exchange rates behaviour is asymmetric

Impact of Fiscal Consolidation on Government Debt in South Africa: Evidence to Structural and Cyclical Effect

The purpose of this paper is to examine the fiscal consolidation impact on government debt in South Africa (SA) looking at both structural and cyclical effects. The paper employs the Structural Vector Autoregression (SVAR) using time-series data from 1990 to 2020 in South Africa. The key contribution of the paper is it with a focus on the effect of fiscal consolidation as well as investigation of the structural and cyclical component effect of government expenditure cut as well as a tax increase in a developing economy like South Africa. We found that government debt falls as of the result of fiscal consolidation achieved through government expenditure cut. The fiscal consolidation of tax increases is better than based on government expenditure cut. The cyclical component of government expenditure increases domestic government debt. This is also found in the structural government expenditure results in an increase in domestic government debt

The Role of Investor Attention in ETF Liquidity

ETFs have gained increasing popularity due to their numerous benefits, including their higher liquidity relative to their counterparts. However, the influence of this increasing attention on their liquidity remains unexplored. Therefore, this study investigates the effect of investor attention on ETF liquidity. To achieve this objective, 80 South African ETFs are examined from January 2018 till December 2022 using a panel regression approach. The findings of this study suggest that an increase in investor attention increases the price impact but reduces the cost of trading, ultimately, leading to an improvement in ETF liquidity. Further analysis reveals that investor attention has a greater impact on ETFs tracking domestic benchmarks, and impacts only ETFs tracking equities, bonds, and property. The analyses also reveal that the effect of investor attention is only significant in the short-run and is eliminated in the long-run, and these effects have been intensified by the COVID-19 pandemic. Global investor attention, however, has an opposing effect on ETF liquidity. These findings are important for investors trading in ETF markets and regulators controlling these markets

Forecasting Monthly Inflation in Bangladesh: A Seasonal Autoregressive Moving Average (SARIMA) Approach

The objective of this study is to forecast the trend of inflation in Bangladesh by utilizing past inflation data. To achieve this objective, we employed the Seasonal Autoregressive Integrated Moving Average (SARIMA) model which is an extension of the Autoregressive Integrated Moving Average (ARIMA) model. Monthly inflation data used for forecasting were derived from the Consumer Price Index (CPI) data obtained from the International Monetary Fund (IMF) database, covering the period from January 2010 to January 2023. Our analysis reveals that the SARIMA (2,0,0)×(1,0,1)12 model is the most appropriate fit. Based on this finding, we predicted the inflation trend in Bangladesh from February 2023 to December 2024. A comparison of our predicted values with the actual values indicates a high degree of correlation between the two. Although a few discrepancies were observed, they did not undermine our prediction since the parameters of the model lay within the 95% confidence interval

The Spill-Over Effects of Cryptocurrencies on Equity and Bonds Market

This study examines the extent to which crypto assets have moved to the mainstream by estimating the potential for spillovers crypto on bond and equity markets using daily data on price volatility and returns. The analysis reveals that the coefficients of the constant variance term, the ARCH and the GARCH parameters are positive and statistically significant at the 1% level across all models. In respect of the mean equation, the results suggest that the spill-over effects of bitcoin on equities and long-term bonds are ambiguous. Spillovers from price volatility of the oldest and most popular crypto asset, Bitcoin, to the S&P 500 and MSCI emerging markets indices have increased by about 12-16 percentage points since the onset of the COVID-19 pandemic, while those from its returns have increased by about 8-10 percentage points. This clearly indicates that the persistence of volatility shocks, as represented by the sum of the ARCH and GARCH parameter is large. Moreover, this suggests that the effect of today’s shock remains in the forecasts of variance for many periods in the future

South African Taxpayers Perceptions towards E-Filing

The study has two parts: the first part studies how South African taxpayers felt about e-filing, and the second part analyses how e-filing affected tax compliance. We use self-structured questionnaires to collect data from about 151 South African taxpayers, and we analyze them using binary logistic regression. The study finds that online tax registration and auto-assessment has a negative relationship with tax compliance in South Africa, while online payment methods, difficulty in tax evasion, and higher educational attainment have a positive association with tax compliance. The study also finds that the extent to which the e-filing system encourages taxpayers to become compliant has a positive and statistically significant relationship with tax compliance. Overall, the study suggests that the development of e-filing has a positive impact on taxpayers' perceptions in South Africa and significantly increases voluntary tax compliance. To maximize the benefits of e-filing, it is important to ensure that taxpayers have access to the necessary technology and knowledge to use it effectively

Socio-Economic Factors Affecting Profitability of Sorghum Farming in Siaya County, Kenya

Despite the nutritional benefits of sorghum and its ability to thrive in the low and unpredictable rainfall conditions in Siaya County, farmers in the area have not widely adopted it as a viable enterprise. In this paper, we study profitability of sorghum production and its determinant factors in Siaya County, Kenya. By randomly sampling 310 farmers, the paper shows that sorghum farming in Siaya County is profitable, with an average gross margin of Kshs. 4,286 per acre and the most profitable farm having a gross margin of Kshs. 24,000 per acre. Moreover, the factors such as the age and education level of the household head, household size, household income, access to extension services, the number of crops intercropped with sorghum, and the nature of farming have significant impacts on gross margins. Thus, the study recommends improving extension services; encouraging farmers to embrace sustainable farming practices such as mixed farming; and incentivizing farmers into sorghum farming

Oil Sector Revenues and the Marginal Propensity to Import: A Focus on Oil-Exporting African Countries

Countries that possess abundant natural resources are often criticized for spending a larger portion of their revenue from selling those resources on imports, as their economies tend to lack diversification. This study aims to examine whether this claim is valid for oil-rich African countries. The paper uses the panel ARDL method to investigate the effect of oil sector revenues on the marginal propensity to import in oil-exporting African countries from 2000-2020. The findings show that in the short run, oil sector revenues do not have a significant impact on the marginal propensity to import. However, in the long run, oil sector revenues have a positive and significant effect on the marginal propensity to import. Additionally, the study reveals that exchange rates have a positive and significant impact on the marginal propensity to import, while the impact of trade openness is negative and significant. Furthermore, gross domestic savings have a negative and significant effect on the marginal propensity to import during the same period. Therefore, the study concludes that increasing oil revenues in the selected countries only resulted in a rise in imports in the long run. It suggests that oil-exporting African countries should save more during periods of rising oil prices as a buffer, and channel these savings towards building facilities that encourage economic growth. It also recommends that exchange rate policies should be used to discourage excessive importation during periods of rising oil prices

Financialization and Economic Growth Nexus in South Africa

We empirically investigate the effects of financialization on economic growth in South Africa. The country experienced increases in the share of the financial sector since the democratic dispensation. This country is also one of the few developing countries with a large financial market. The sample period includes a long-run horizon from 1994 to 2021. The study applies quantile regression methodology which we use to explain the effects of financialization at different levels of economic growth. We estimate the effects of financialization at the 25th, 50th, 75th percentile of economic growth. The key measure of financialization is the finance gross value added and the measure of economic growth is the gross domestic product. We find that financialization has a significantly high and positive effect only at all the levels of economic growth. From the different percentiles, financialization contributes more to higher levels of economic growth

Institutional Shareholders' Monitoring Intensity and Executive Remuneration in South Africa

This study investigates the effect of distraction measures as a proxy for the intensity of institutional shareholders' monitoring responsibility regarding corporate executive remuneration in the South African context. We employ the more robust Generalised Method of Moments (GMM) estimation approach to analyse the data from firms listed on the Johannesburg Stock Exchange (JSE) covering the period 2004-2019. The results show that distraction has a significant positive impact on corporate executive remuneration. Hence, when institutional shareholders’ attention shifts due to distraction, monitoring control is relaxed, and corporate executive officers manipulate remuneration to their advantage. The results are useful for investment managers and prospective investors in their efforts to ensure governance mechanisms that enhance corporate value to the benefit of stakeholders