An Analysis of the 2008 Subprime Mortgage Crisis: Causes, Effects and Policy Response

This essay scrutinized the effects of Quantitative Easing (QE) on selected macroeconomic and financial variables. By means of a desktop approach, we find that QE1 had a strong and beneficial impact on the real economy through credit easing whereas QE2 and QE3 had small positive or neutral effects on banks and life Insurers. Although QE did not close the gap left by the 2008 global financial crisis, it helped reduce the rate at which the crisis was rising and proved to be an effective crisis management tool. QE boosts the economy in the short run but weakens the economy in the long run

An Analysis of the 2008 Global Financial Crisis: Was Quantitative Easing Appropriate?

This essay aims to investigate the effects of Quantitative Easing (QE) on selected macroeconomic and financial market variables. By means of a desktop approach, we find that QE1 had a strong and beneficial impact on the real economy through the banking sector while QE2 and QE3 had small positive or neutral effects on banks and life Insurers. Although QE did not close the gap left by the 2008 global financial crisis, it helped reduce the rate at which the crisis was rising and proved to be an effective crisis management tool. QE boosts the economy in the short run but weakens the economy in the long run. Thus, Central banks should only consider QE when the economy is in crisis and not as a substitution for structural reforms

Is the Co-Movement Between Budget Deficit and Current Account Deficit Applicable to South Africa?

The idea of the fiscal balance to have a statistically significant impact on the current account is known as the Twin deficits hypothesis, which this study seeks to investigate. We make use of annual macroeconomic data spanning from 1990 – 2017. Additionally, we utilise novel time-series cointegration techniques such as the ARDL Bounds and Granger causality analysis. From empirical tests, we find that a long-run relationship exists between budget deficit and current account deficit. Moreover, the real effective exchange rate, real interest rate and GDP are found to have a negative and statistically significant impact on the current account whereas the budget deficit, on the contrary, is found to have a positive and statistically significant impact on the current account deficit, at least in the short-run. Granger causality test indicates unidirectional causation from budget deficit to current account deficit, lagged one period. Given these findings, we fail to reject the Twin Deficits Hypothesis within the context of South Africa. The policy implication is for the government to fix its fiscus so as to improve the current account stance. This can be achieved through extended fiscal adjustments to bring expenditure in line with revenue, thereby stabilising debt

An Analysis of the 2008 Global Financial Crisis: Was Quantitative Easing Appropriate?

This essay aims to investigate the effects of Quantitative Easing (QE) on selected macroeconomic and financial market variables. By means of a desktop approach, we find that QE1 had a strong and beneficial impact on the real economy through the banking sector while QE2 and QE3 had small positive or neutral effects on banks and life Insurers. Although QE did not close the gap left by the 2008 global financial crisis, it helped reduce the rate at which the crisis was rising and proved to be an effective crisis management tool. QE boosts the economy in the short run but weakens the economy in the long run. Thus, Central banks should only consider QE when the economy is in crisis and not as a substitution for structural reforms

An Analysis of the 2008 Subprime Mortgage Crisis: Causes, Effects and Policy Response

This essay scrutinized the effects of Quantitative Easing (QE) on selected macroeconomic and financial variables. By means of a desktop approach, we find that QE1 had a strong and beneficial impact on the real economy through credit easing whereas QE2 and QE3 had small positive or neutral effects on banks and life Insurers. Although QE did not close the gap left by the 2008 global financial crisis, it helped reduce the rate at which the crisis was rising and proved to be an effective crisis management tool. QE boosts the economy in the short run but weakens the economy in the long run

An Analysis of the 2008 Global Financial Crisis: A Desktop Approach

This essay aims to investigate the effects of Quantitative Easing (QE) on selected macroeconomic and financial market variables. By means of a desktop approach, we find that QE1 had a strong and beneficial impact on the real economy through the banking sector while QE2 and QE3 had small positive or neutral effects on banks and life Insurers. Although QE did not close the gap left by the 2008 global financial crisis, it helped reduce the rate at which the crisis was rising and proved to be an effective crisis management tool. QE boosts the economy in the short run but weakens the economy in the long run. Thus, Central banks should only consider QE when the economy is in crisis and not as a substitution for structural reforms

Is the Co-Movement Between Budget Deficit and Current Account Deficit Applicable to South Africa?

The idea of the fiscal balance to have a statistically significant impact on the current account is known as the Twin deficits hypothesis, which this study seeks to investigate. We make use of annual macroeconomic data spanning from 1990 – 2017. Additionally, we utilise novel time-series cointegration techniques such as the ARDL Bounds and Granger causality analysis. From empirical tests, we find that a long-run relationship exists between budget deficit and current account deficit. Moreover, the real effective exchange rate, real interest rate and GDP are found to have a negative and statistically significant impact on the current account whereas the budget deficit, on the contrary, is found to have a positive and statistically significant impact on the current account deficit, at least in the short-run. Granger causality test indicates unidirectional causation from budget deficit to current account deficit, lagged one period. Given these findings, we fail to reject the Twin Deficits Hypothesis within the context of South Africa. The policy implication is for the government to fix its fiscus so as to improve the current account stance. This can be achieved through extended fiscal adjustments to bring expenditure in line with revenue, thereby stabilising debt

Tax Knowledge, Tax Complexity and Tax Compliance in South Africa

Purpose: the key objective of this study is to investigate the influence of tax knowledge and tax complexity on tax compliance in South Africa. Design: the data collection process involved self-structured questionnaires targeted at South African personal income taxpayers. The data was analyzed by means of descriptive analysis, inferential statistics and binary logistic regression. Findings: the findings from the Pearson correlation test revealed that knowledge on tax types, tax payment methods and tax penalties is positively associated with tax compliance and this association was found to be statistically significant. In addition, the results from the binary logistic regression revealed that knowledge on tax penalties is positively associated with higher probabilities of tax compliance and this association was likewise found to be statistically significant. This, to some extent, implies that tax penalties are well enforced by the government to induce tax compliant behaviour. Meanwhile, demographic factors such as the level of educational attainment as well as perceptions on the state of democracy were found to play a significant role in inducing tax compliance. Practical Implications: the study recommends the expansion of educational programmes that inform taxpayers about the different tax types they are liable for, the procedure for calculating and filing tax returns as well as the financial and legal consequences of exhibiting a tax non-compliant behaviour. Originality: The research topic is relevant for the management of tax systems especially during times wherein policymakers are in search of approaches to collect additional budget revenues. The study also presents a historical overview of problems that are observed in the income tax system of the Republic of South Africa, and this analysis is linked to the problems of tax compliance

CAN CREDIT SCORES ENHANCE TAX COMPLIANCE IN SOUTH AFRICA?

A compliance enhancing tax system is crucial for revenue mobilization, administrative efficiency and consequently the realization of national strategic goals. There are several factors, however, which influence a taxpayer’s ability to comply with the tax system and these include economic, institutional, demographic and social factors. Against this backdrop, the primary objective of this study is to estimate taxpayers’ perceptions towards credit scores and the extent to which credit scores can enhance tax compliance in South Africa. The data collection process involved self-structured questionnaires analyzed by means of descriptive statistics, inferential analysis and binary logit regression. Overall, the findings reveal that the level of educational attainment, perceptions on the state of democracy and difficulty of tax evasion are positively associated with higher probabilities of a tax compliant attitude in South Africa. By contrast, the rate of social influence was found to be negatively related with higher probabilities of a tax compliant attitude. Perceptions on credit scores (being the variable of interest) were found to be positively associated with higher probabilities of a tax compliant behavior. This, to some extent, implies that linking the tax compliance status of individual taxpayers with their credit scores is most likely to yield positive results as far as tax revenue mobilization is concerned. Given these findings, the study recommends a revision of the current credit score framework to include the tax compliance status of taxpayers as this would induce a tax compliant behavior by penalizing the credit score of non-tax compliant individuals

A descriptive analysis of barriers to entry in South African markets

Over the past few years, the ease and likelihood of doing business in South Africa have deteriorated due to various factors, including the political and economic environment. At the lower level, rival firms face significant barriers to entry, which is the focus of this study. Using secondary data from the Competition Commission of South Africa, this study performs an in-depth analysis of barriers to market entry in South Africa. The findings reveal that barriers to entry are more prevalent in intermediate and larger mergers than in small mergers. Strategic barriers at the lower level are dominated by technical know-how, substantial investment in marketing, and long-term contracts. Regulatory barriers, on the other hand, are mainly driven by licensing, registration restrictions, exclusive rights, and standards and safety requirements. Structural barriers include capital investment costs, economies of scale, and initial start-up costs, the chief barriers rival firms face. When stratified by economic sector, the findings indicate that the manufacturing, real estate, wholesale, and retail trade sectors are characterised by significant barriers to entry