Integration of the new development bank into the international financial architecture

The study looked at the integration of the BRICS New Development Bank into the international financial architecture. In doing so, it made use of an econometric evaluation of the impact of the loans received from the current dominant financial institutions, namely International Monetary Fund (IMF) and the World Bank, on economic growth of ten self-selected African countries. Given the challenges and the failures of the Western dominated funding to African countries, it is important to ensure that the funding approach of the New Development Bank does not resemble that of the current international finance system. Using panel data and quantile regression econometric models on annual data from ten self-selected African countries that are recipients of World Bank and IMF loans from 1994 to 2014, this thesis presents a framework for the integration of the BRICS’ New Development Bank into the global financial architecture. The results obtained shows a negative and statistically significant impact of World Bank loans on Gross Domestic Product of the country under analysis and a positive statistically insignificant impact of IMF loans. Given the existing global financial institutions and the wealth of expertise at their disposal, this thesis concludes that the existing global financial structure cannot be done away with completely but the New Development Bank should rather perform a complementary role in the global finance space. Accordingly, the New Development Bank should champion a ‘post ideological rhetoric’ in the global financial architecture

The Random Walk Theory And Stock Prices: Evidence From Johannesburg Stock Exchange

In this paper, we test the Johannesburg Stock Exchange market for the existence of the random walk hypothesis using monthly time series of the All Share Index (ALSI) covering the period 2000 – 2011. Traditional methods, such as unit root tests and autocorrelation test, were employed first and they all confirmed that during the period under consideration, the JSE price index followed the random walk process. In addition, the ARIMA model was constructed and it was found that the ARIMA (1, 1, 1) was the model that most excellently fitted the data in question. Furthermore, residual tests were performed to determine whether the residuals of the estimated equation followed a random walk process in the series.   The authors found that the ALSI resembles a series that follow random walk hypothesis with strong evidence of a wide variance between forecasted and actual values, indicating little or no forecasting strength in the series. To further validate the findings in this research, the variance ratio test was conducted under heteroscedasticity and resulted in non-rejection of the random walk hypothesis. It was concluded that since the returns follow the random walk hypothesis, it can be said that JSE, in terms of efficiency, is on the weak form level and therefore opportunities of making excess returns based on out-performing the market is ruled out and is merely a game of chance

Testing random walk hypothesis in the stock market prices: evidence from South Africa's stock exchange (2000- 2011)

The Johannesburg Stock Exchange market was tested for the existence of the random walk hypothesis using All Share Index (ALSI) and time series data for the period between 2000 and 2011. The traditionally used methods, the unit root tests and autocorrelation test were employed first and they all confirmed that during the period under consideration, the JSE price index followed the random walk process. In addition, the ARIMA model was built and it was found that the ARIMA ( 1, 1, 1) was the model that best fitted the data in question. Furthermore, residual tests to help determine whether the residuals of the estimated equation show random walk process in the series were done. It was found that the ALSI resembles series that follow random walk hypothesis with strong evidence of RWH indicated in the conducted forecasting tests which showed vast variance between forecasted values and actual indicating little or no forecasting strength in the series. To further validate the findings in this research, the variance ratio test was conducted under heteroscedasticity and it also strongly corroborated that the existence of a random walk process cannot be rejected in the JSE. It was concluded that since the returns follow the random walk hypothesis, it can be said that JSE is efficient in the weak form level of the EMH and therefore opportunities of making excess returns based on out- performing the market is ruled out and is merely a game of chance. In other words, it will be of no use to choose stocks based on information about recent trends in stock prices