OpenUCT :: Browsing by Author "Charteris, Ailie"

Browsing by Author "Charteris, Ailie"

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Open Access
An evaluation of the challenges facing MSMEs in the informal settlement of Namibia
(2018) Tjonga, Lorence U; Charteris, Ailie
The study investigated challenges facing Micro, Small and Medium Enterprises (MSMEs) in the informal settlements of Namibia
Open Access
An evaluation of the challenges facing MSMEs in the informal settlement of Namibia
(2018) Tjonga, Lorence U; Charteris, Ailie
The study investigated challenges facing Micro, Small and Medium Enterprises (MSMEs) in the informal settlements of Namibia
Open Access
An investigation into the profitability and sustainability of market timing strategies in Real Estate Investment Trusts (REITs): A global perspective
(2022) Barry, Nortimer; Charteris, Ailie
The buying and selling activity of market participants creates dynamic movements in the prices of listed securities. Investors typically aim to realise short term profit from this volatility using market timing strategies. Several studies have explored the reliability of market timing rules across asset classes. The unique properties of Real Estate Investment Trusts (REITs) and the consequent potential predictability in the returns of this asset class has raised the question of whether market timing strategies can be successfully applied to this asset class. This study investigates the effectiveness of market timing strategies on REITs and whether the effectiveness of these strategies persists through market crises. The study covers the period from January 2001 to December 2020 and employs data from six of the largest REITs markets globally – the United States, Japan, United Kingdom, Australia, Brazil, and South Africa. Four market timing strategies are studied: the moving average, time series momentum, modified moving average crossover, and dual momentum, and, as such, the analysis provides a comparison of market timing strategies that are seldom observed together. The effectiveness of these strategies is also tested over three periods covering the Global Financial Crisis, European Sovereign Debt crisis; and the Covid-19 pandemic. In general, the MA and TSM market timing rules exhibited very similar performance while the MMAC and DM market timing rules exhibited the highest returns. Of the four market timing rules, the DM market timing rule exhibited the highest return with the lowest overall risk, indicating that it has the highest predictive ability of the four rules. The findings of this study are useful for investors aiming to generate returns from short-term market fluctuations.
Open Access
Constructing efficient multi-asset class portfolios: Top-down or bottom-up?
(2017) Pule, Lebohang; Charteris, Ailie; De Kock, Johan
This dissertation concerns itself with the problem of constructing multi asset class portfolios. The investment process is aimed at solving two problems. The first problem is estimating the future returns of individual securities, which is an exercise fraught with uncertainty as the future is fundamentally unpredictable. This uncertainty means that the investor must allocate his portfolio to a number of assets instead of just one, in case his predicted future returns do not materialize. This leads the investor to the second problem of how best to construct the portfolio. It is this part of the investment process which is the subject of this dissertation which examines whether it is best to construct multi-asset class portfolios using a top-down or bottom-up approach. In the top-down approach one begins by creating independent single asset class portfolios which are then combined to create a multi-asset class portfolio. The bottom-up approach constructs the portfolio by considering all the securities available to the investor (irrespective of asset class) at the same time. The Mean-Variance and Black- Litterman models are reviewed in detail. Portfolios are then created using these portfolio construction methods in order to compare the two approaches. In constructing these portfolios, the commonly encountered problem of missing data in financial return series is also examined. The main result is that the top-down and bottom-up approaches create similar efficient frontiers, though the bottom-up approach results in an extended frontier which allows investors to obtain efficient portfolios with either a higher expected return or a lower volatility.
Open Access
Determinants of Economic Growth-The Case of Zimbabwe
(2019) Ncube, Trinity M; Biekpe, Nicholas; Charteris, Ailie
The paper investigated the determinants of economic growth in Zimbabwe over the period 1980 to 2017 drawing from previously identified factors as discussed in international literature which had been acknowledged as important determinants. The variables included human capital, gross fixed capital formation, unemployment, inflation and government expenditure. The study employed Unit Root Tests. The Auto Regressive Distributed Lag model was used to examine the mixed variable while the Ordinary Least Squares model and the Johansen test were used to examine all stationary and non-stationary variables respectively. In the case of co-integration, the Error Correction Model and the Causality test were run. Ultimately, the results indicated that in the long-run gross fixed capital formation has a positive influence on economic growth while human capital development has a negative influence. ECM found that in the short run there is a positive relationship between lags of economic growth, government expenditure, inflation and human capital with economic growth.
Open Access
Determinants of Private Capital Flows into Tanzania
(2019) Bakilana, John; Charteris, Ailie
This study investigates a selection of pull determinants of non-FDI private capital flows into Tanzania over the 1995 to 2004 period. The study is informed by the potential of the respective capital to contribute towards the economic development process. The study uses a time series analysis to test the various determinants. The results reveal that in the long-run, financial development, GDP growth and gross capital formation have a positive impact to the flows of non-FDI private capital into Tanzania. Broad money has a negative impact to similar flows. In the short-run, results reveal an insignificant relationship between all the selected determinants and the capital flows. The results suggest a need for continued reforms and improved capacities to attract more flows.
Open Access
Does the Nature of the Crisis Matter? A Study of Global Bank Performance during a Credit Crisis, The Debt Crisis &; Health Crisis
(2022) Vermaak, Kelly; Charteris, Ailie
This study examined the global performance of banks during the Global Financial Crisis (GFC), the sovereign debt crisis, and COVID-19 crisis. An ordinary least squares (OLS) multiple regression model was used to observe the influence of bank specific, macroeconomic and industry related variables on global bank performance. Buy-hold-abnormal-returns (BHAR) were used as a measure of performance to assess whether the nature of the crisis mattered. A sample period of June 2007 to December 2008, May 2011 to December 2011, and 11 January 2020 to 31 May 2020 were used to represent the GFC, sovereign debt crisis, and COVID-19 crisis, respectively. Higher liquidity, loans, beta, and idiosyncratic volatility as well as a lower credit-loss ratio explained the poor performance of banks during the GFC. The negative spillover effects from the GFC significantly hindered banks' lending capacity and ability to obtain funding from the short-term market during subsequent crises. This meant lending and loans had no influence on performance during the sovereign debt crisis, evident by the insignificant relationship found. Unlike the finding for the GFC and COVID-19 crisis, both beta and idiosyncratic risk were unable to explain performance during the sovereign debt crisis. Similar to the GFC, lower loans, liquidity and credit-loss ratio helped banks achieve better returns, while greater exposure to systematic and idiosyncratic risk led to poorer performance during the COVID-19 crisis. The study further found that banks were more susceptible to the COVID-19 crisis relative to the credit crisis. Furthermore, banks in countries with a high GDP per capita and current account balance witnessed better performance during the COVID-19 crisis. Policy support and the release of Basel III, post the GFC, significantly aided in bank resilience and performance during crisis periods. However, this study found no relationship between bank share price performance and bank capital. During the COVID-19 crisis only, banks with more tangible equity earned greater returns. The policy implications of the findings highlighted how responses from previous crises ensured the financial stability of the financial system and its ability to withstand these shocks. Overall, the difference in findings across each crisis suggested that the nature of the crisis matters. Knowing the nature of the crisis and factors which influenced that particular type of crisis could help inform banks and authorities on when and how to take early precautions in the event of an approaching crisis.
Open Access
The economic evaluation of aquaculture as a climate change adaptation option in fisher communities of Zimbabwe
(2017) Tongowona, Admire; Charteris, Ailie; Kapfudzaruwa, Farai
Due to climate change, fisher households who depend on fishing for their livelihood are faced with a number of challenges that include low productivity. There is now an acknowledgement internationally that fishers cannot depend on hunting fish when all other food producing sectors have adapted. How economic and feasible is it for fishers to consider aquaculture in the face of climate change? This dissertation investigates the economic viability of aquaculture as a climate change adaptation option in rural fisher communities of Zimbabwe. The southern lowveld district of Mwenezi was used as a case study in the economic evaluation of pond culture and cage culture as a climate change adaptation strategy from a baseline position. Data was obtained from secondary sources which include the private sector involved in aquaculture, civil society organisations and the fishers practising aquaculture in both Mwenezi and another district, Kariba. The cost benefit analysis method of economic evaluation was used to assess the economic viability of pond and cage culture forms of aquaculture. The net present value, internal rate of return and benefit cost ratio were used as the decision criteria. Two scenarios were considered depending on the type of funding for the initial investment - scenario one was built on donor funding support while scenario two relied on a bank loan with interest for financing. A sensitivity analysis was also performed to determine the extent to which different factors affect the economic viability of both pond and cage culture. Both pond and cage culture were found to be economically viable as climate change adaptation options in fisher communities of Zimbabwe. Cage culture was found to have a higher net present value under both scenarios when compared to pond culture. However, under scenario two, pond culture was found to have a higher internal rate of return and benefit cost ratio. The inconsistencies were due to the variations in the scale of upfront investments between pond and cage culture where the latter requires a higher initial investment. Key factors that affect the viability of aquaculture as an adaptation strategy in Zimbabwe include the market price of fish, the cost of fish feeds and the price of fingerlings. While these factors are primarily economic, there are other factors which may affect the viability such as the increasing frequency of natural disasters.
Open Access
Effect of transaction costs on international remittance flows from developed countries: A Sub-Saharan context
(2018) Wahito, Isaac; Charteris, Ailie
Remittances play a major role both at a household and a macro-level especially in developing countries. They are associated with benefits such as of economic growth and employment opportunities for a country, while at the household level, remittances are a stable source of income in provision of basic needs such as of food, clothing, shelter and education. Remittance costs have been viewed as a major deterrent to higher volumes of remittance inflows to a country and tend to encourage the use of the cheaper informal channels, which have adverse consequences. This study investigates the drivers of remittance transaction costs and the subsequent effect of transaction costs on remittance flows using bilateral data between several countries in Sub-Saharan Africa and the United Kingdom over the period 2011 to 2014. Remittance costs are measured as a percentage of the amount remitted. Using multivariate generalised least squares analysis of panel data, this study tested the first hypothesis that financial development, banking concentration and financial risk of a migrant's home country influence transaction costs. Secondly, the study tested the hypothesis that transaction costs have a negative relationship with remittance inflows into the countries. The specific effect of transaction costs on remittance flows is investigated alongside other variables which have been identified to influence remittance flows. These include; the stock of migrants in the host country and host and home country income levels proxied by gross domestic product per capita. The results of random effects estimations show that financial development and bank concentration have a positive and statistically significant relationship with transaction costs. That is, a higher level of financial development does not necessarily lower transaction costs but a high banking concentration, which infers lower competition in the banking sector, drives remittance costs up. On the effect of transaction costs on remittance flows into the countries in sub-Saharan Africa, the study found a negative and significant relationship. That is, a higher cost in remitting funds via formal channels reduces the remittance flows and as such, it thus increases the probability of the use of informal channels. The stock of migrants is also found to have a positive and statistically significant effect on remittances, meaning that a higher number of migrants in a developed country leads to higher volumes of remittances to the migrants' home countries. The proxies for incomes were found to be insignificant. The implications of the significance of remittance costs are noteworthy as they add evidence on the need to cut remittance costs by formal channels significantly to three percent of the total amount remitted by global development institutions.
Open Access
How have world shocks affected the business cycles of Africa's frontier economies?
(2018) Swanepoel, Debra-Lee; Charteris, Ailie
This paper builds on earlier work in business cycle theory, particularly in the growth cycle tradition of (Lucas, 1976), to analyse business cycles in Africa's Frontier Market Economies (FMEs), which include the following countries: Botswana, Ghana, Kenya, Mauritius, Mozambique, Nigeria, Tanzania, Uganda and Zambia. This paper extends the work of (Agenor, McDermott, & Prasad, 2000), (Rand & Tarp, 2002) and (R. L. Male, 2009) who have established a set of stylised facts for the fluctuations of business cycles in developing countries, to examine the impact of world shocks on the FMEs through the development of the stylised facts for these economies. This paper goes on to assess the suitability of the stylised facts that have been established for developing countries for Africa's FMEs. This thesis makes an important contribution to the literature, by focussing on Africa's FMEs which are also considered to be the anchors of growth and future development for the continent. In accordance with existing business cycle literature, this study examines the impact of endogenous and exogenous factors on the business cycles of the FMEs, to assess firstly how these factors impact the FMEs business cycles, and secondly whether there are similarities with other developing countries in terms of how these business cycles react to these impacts. The analysis is conducted through the examination of the volatility, persistence and cross-correlation between domestic output (gross domestic product) and a large group of macroeconomic variables (including consumption, fiscal variables, trade variables as well as monetary variables) to establish the stylised facts for the FMEs, which are then compared to the generalised stylised facts established for developing countries. The results indicate that only selected stylised facts for the analysis of business cycles of developing countries are valid for the FMEs, such as the volatility of output, public sector revenue and expenditure, and consumption. However, many aspects of the business cycles of these economies are significantly different to the stylised facts such as the lower than expected volatility of investment, as well as the volatility of exports which is double the expected value. The policy implications of the findings for Africa's FME's are also reflected upon.
Open Access
The impact of stock market performance on economic growth in Malawi
(2018) Ng’oma, Diana Kisyombe; Charteris, Ailie
This study investigated the causal relationship between the performance of the Malawi Stock Exchange (MSE) and economic growth in Malawi using quarterly data for the period 2003 to 2017. Stock market performance was measured using four indicators: the all share price index, total stock market capitalisation, stock market liquidity, and the number of shares traded. Economic growth was measured by real Gross Domestic Product (GDP). The Autoregressive Distributed Lag (ARDL) model was used to test for the existence of a long- run co-integrating relationship between the variables, while Granger causality tests, impulse response functions and variance decomposition analyses were employed to examine the short- run dynamics. The co-integration tests found no evidence of a long-run relationship between real GDP and all measures of stock market performance. However, there was evidence of the existence of shortrun relationships, with a positive and significant contemporaneous relationship noted between real GDP and stock market capitalisation and a negative and significant relationship between real GDP and market liquidity. The Granger causality tests revealed the following intertemporal relationships: bidirectional causality between real GDP and stock market liquidity and unidirectional causality from stock market capitalisation to real GDP and changes in the all share price index to real GDP. The impulse response functions and variance decompositions further revealed real GDP reacts highly to a shock in market capitalisation than to other variables and a shock in real GDP causes a higher fluctuation in liquidity than in any other variables. The findings of this study thus show that there is short-term causality between the performance of the MSE and economic growth in Malawi albeit that no long-run relationship exists. In light of these results, specific policy recommendations are provided for various stakeholders so as to enhance economic growth in Malawi. Suggestions for future research are also given.
Open Access
Investigating the effects of dollarization on economic growth in Zimbabwe (1990-2015)
(2018) Nemaramba, Nhongerai; Charteris, Ailie
This research presents a comprehensive analysis of Zimbabwe’s adoption of a basket of foreign currencies as legal tender and the resultant economic effects of this move. Upon adoption in 2009, Zimbabweans were optimistic about the future as they thought the multicurrency regime would bring a more stable economy. Eight years down the line, it is prudent to evaluate whether this optimism was justified in terms of the effect of the policy on the Zimbabwean economy. An econometric model was applied in this study to investigate how dollarization and the other macroeconomic factors impacted on economic growth. The findings of the study show that most macroeconomic indicators improved as a result of dollarization. The average economic growth rate, as measured by growth in gross domestic product, was -5.22 per cent for the period before dollarization (1990 to 2008) and 14.83 per cent for the dollarized period (2009 to 2015). The difference in average growth rate is 20.05 per cent and is statistically significant at 1 per cent. This implies that the average economic growth rate improved by 20.05 per cent after the economy was dollarized. The average GDP per capita improved during dollarization by $278.78 and this difference is statistically significant at the 1 per cent level. Foreign direct investment inflows per capita improved from the pre-dollarization average of $5.40 to an average of $20.89 during the dollarized period, with this difference statistically significant at the 1 per cent level. Inflation declined substantially from over 230 million per cent to an average of less than 1 per cent during the dollarized period. However, despite a significant improvement in some macroeconomic variables, Zimbabwe’s debt increased during dollarization. The results from the regression model of economic growth on its determinants further show that dollarization improved economic growth. In the absence of a dummy variable for dollarization, economic growth is influenced by population (statistically significant at 10 per cent), literacy (statistically significant at 5 per cent) and inflation (statistically significant at 1 per cent). However, with a dollarization dummy, growth becomes a function of inflation (statistically significant at 1 per cent) and dollarization (statistically significant at 10 per cent). The findings generally indicate that dollarization has improved economic growth. They point to the policy implication that a control of inflation to reasonable levels is crucial for economic growth. The policy implications for such findings are discussed in the study
Open Access
Investment Promotion; Foreign Direct Investment Determinants and Policy Framework Analysis for India: Lessons for Zimbabwe
(2018) Muchinguri, Tawanda; Charteris, Ailie
Today Zimbabwe finds itself on the cusp of a new era, an inflection point which should set the country on a path towards recovery and sustainable economic growth, after years of being in a socio-economic quagmire yet extravagantly endowed with natural resources and extraordinary human capital. This study seeks to examine how best to unlock this untapped and embedded value for the emancipation of Zimbabwe’s people by looking at how other countries have extricated themselves from similar situations by the use of foreign direct investment. Pursuant to this cause, the author identified India as a case study from which Zimbabwe can learn and thus seeks to identify and measure the determinants of foreign direct investment and understand the policy framework underlying these determinants. Gross domestic product, trade, the exchange rate, inflation, foreign reserves and the foreign direct investment restrictiveness index were employed as variables in the research using annual data over a 27 year period from 1990 to 2016. This period was deliberately chosen to capture the impact of the liberalisation and reform efforts which set India on a growth path and today is the biggest recipient of greenfield foreign direct investment. The autoregressive distributed lag cointegration framework was employed as an estimation technique to examine the long-run relationship between foreign direct investment and the chosen explanatory variables. The findings reveal that the exchange rate and the foreign direct investment restrictiveness index are the key determinants of FDI in India with a negative relationship, thus a stronger Indian rupee and better restrictiveness index rating lead to more foreign direct investment inflows. Based on the results, placed in the context of India’s foreign direct investment policy framework, the study makes bespoke and befitting recommendations to the Zimbabwean authorities on how to use the import and the tenets of the foreign direct investment restrictiveness index as a basis for devising far reaching reforms needed to attract foreign direct investment for the sustainable development of Zimbabwe.
Open Access
Other people's money: does external debt improve economic growth performance of Frontier market economies?
(2019) Musonda, Mary-Anne; Alhassan, Abdul Latif; Charteris, Ailie
Sources of long-term growth in an economy hinge on the productive potential of the country. Major contributing factors in the production of an economy include the population representing the labour force, advanced technological inputs, investment and capital accumulation. External debt can be viewed as a critical additional income stream to enhance the productive capacity of an economy, and to supplement internal investment in cases where internal investment is not sufficient to fund economic growth focused projects and activities. However, external debt also has devastating effects on economic growth if left unmonitored or misused. Frontier Market Economies (FMEs), which are economies developing into Emerging Market Economies (EMEs), are amongst the fastest growing in the world with this growth projected to continue into the future. Yet, these countries are often forced to rely on external financing because of insufficient local markets. It is thus of critical importance to ascertain whether external debt has been a benefit or hindrance to these economies in the past, so as to develop appropriate debt management strategies to support their growth in the future. The effect of external debt on economic growth in eight FMEs is examined in this study using the system Generalized Methods of Moments (GMM) model to test for a linear relationship as well as an inverted U-shape curve between external debt and economic growth. An inverted U-shape curve implies that a threshold point exists which signals a point beyond which an economy becomes over-indebted, thus hampering economic growth. The findings of this study reveal that external debt has a positive and significant impact on economic growth in the FMEs studied. However, there was no inverted U-shape curve between the two variables. Instead a U-shape exists and thus, no maximum level of borrowing was found for the FMEs. Appropriate debt management strategies are discussed in light of the findings. Therefore, with improved demographics and strong consumption growth mixed with a lack of connection from world economics, FMEs have the potential to be part of the rapid growing economies in the world.
Open Access
Savings, investment and economic growth in Namibia
(2018) Namoloh, Julius Nyerere; Charteris, Ailie
This study examined the interaction between saving, investment and economic growth in Namibia. The relationship between these variables is central to Namibia’s guiding macroeconomic framework. However, empirical evidence has shown that the relationship between saving, investment and economic growth depends on the country context. This makes it important to understand the policy implications of the interaction between these variables in Namibia. The specific objectives of the study were to investigate the causal relationship between saving and investment and the impact of the saving-investment relationship on economic growth in Namibia. The diagnostic testing using the Johansen cointegration test revealed a long-run relationship between the study variables with one cointegrating equation. The long run analysis was followed by Granger causality tests to understand short-run causal relationships between the variables. Impulse response functions and variance decompositions were also estimated to examine the interaction between the variables. The results from the Vector Error Correction Model showed that there was a positive long-run relationship between economic growth and investment, & savings and investment in Namibia. The Granger causality test revealed a causal relationship between saving and investment, consistent with the long-run analysis. The study implications are that a pro-saving policy can achieve increased investment. However, the long run relationship between investment and economic growth implies that investment should be made on a longer term for it to impact on economic growth. It is therefore recommended that Namibia implements policies to encourage long term investments. This can be achieved through waiving duty on capital goods and offering tax incentives to investors in strategic sectors of the economy.
Open Access
The determinants of government bond yields: A comparative analysis of African, emerging and developed countries
(2023) Machethe, Tumelo; Charteris, Ailie
Debt is a critical source of finance for countries to fund their budget deficits and development objectives. However, high yields discourage the issuance of bonds by African economies and impose financial difficulties, thus hindering the necessary development of the continent. This study examines the determinants of government bond yields in Africa and provides a comparative analysis against other emerging and advanced countries. The 10-year government bond is used as a proxy for the bond yield and its determinants are examined over the period 2010 – 2019. The Fixed Effects panel data model with an adjustment for heteroskedasticity and cross-sectional dependence is used. The findings show that Gross Domestic Product (GDP) growth, government debt and the Federal Reserve fund rate have a significant impact on African government bond yields. In contrast, for other emerging and advanced economies, additional factors affect government bond yields including the current account balance, exchange rate, inflation and volatility. The results of this study have important policy implications for governments in Africa as increased knowledge of the determinants of government bond yields provides direction as to what policies they can focus on to aid in lowering yields. For example, given that GDP growth is found to be a significant determinant of African government bond yields, this means that governments must focus on building industries so that they produce more finished goods. Intra-Africa trade must be expedited to foster self-sufficiency of Africa and reduce reliance on trade with the big economies. These results also serve to raise awareness and entice global investors towards holding African country bonds.
Open Access
The Effects of Dollarisation to the Zimbabwean Economy (1990-2017)
(2019) Chanakira, Blessmore; Charteris, Ailie
The study aims to establish the effects of dollarisation on the Zimbabwean economy covering a period of 28 years from 1990 to 2017. The study employed Autoregressive Distributed Lag (ARDL) model to establish the short and long run relationship between dollarisation, financial performance indicators (FPIs) (Inflation, foreign direct investment, trade openness and Gross Domestic Product) and non-financial performance indicators (NFPIs) (rule of law). Annual time series data was considered under this study. In the long run dollarisation positively influences gross domestic product and trade openness and negatively influences inflation. In the short run dollarisation is significantly related to gross domestic product, trade openness and inflation. Short run results indicate that dollarisation is negatively related to gross domestic product and inflation and positively related to trade openness. Based on the findings from the empirical analysis, Zimbabwe is discouraged from de dollarizing since it requires a long-term strategy with robust policies put in place. Zimbabwe should return to full dollarisation and select the rand as an anchor currency whilst preparing to join the common monetary area. It is also recommended that Zimbabwe should put in place performance measures to measure governance indicators with emphasis on respect for property and human rights, including fighting corruption.
Open Access
The Effects of financialisation on development in South Africa
(2019) Chipangila, Chitalu Joshua; Nilsson, Warren; Charteris, Ailie
Interest in the concept of financialisation has gained traction in both developed and emerging markets. With roots embedded in the economic theory of neo-liberalism, the concept of financialisation can be broadly defined as the growing importance of financial instruments and the financial sector. A large body of empirical work in developed markets has generally indicated a negative association between financialisation and various socio-economic indicators. However, the limited empirical evidence in emerging markets has proved inconsistent. This study examines the presence of financialisation in South Africa since the start of the democratic era covering 1994 to 2017, and explores the relationship between financialisation and several key socio-economic factors in the country including economic growth, investment, inequality, unemployment and innovation. Financialisation is measured using two generally accepted proxies - the contribution of the financial sector to total value added in the economy and the percentage of people employed in the financial sector. In addition, two other measures are used based on the work of Krippner (2005) with the first the ratio of portfolio income generated by non-financial firms relative to revenue yielded by productive activities and the second the ratio of the financial sector's revenue contribution to the economy in relation to the non-financial sector. The Autoregressive Distributive-Lag (ARDL) model is used to examine the long-run and short-run associations between financialisation and the key development indicators. The study finds evidence in support of the occurrence of financialisation in South Africa post 1994. The results of the statistical analysis reveal that for the generally accepted proxies for financialisation, financialisation has a positive effect on unemployment reduction and economic growth, no effect on inequality reduction and investment, while the evidence with regards to innovation is mixed. The additional results from the Krippner financialisation ratios indicate that financialisation has a positive effect on inequality reduction and economic growth, a negative effect on innovation and investment, while no effect on unemployment reduction. The findings of this study contradict theoretical expectations, as they point to some positive effects of financialisation on the South African economy although there are also some negative effects. In light of this, policy recommendations are provided so as to enhance these positive effects while also safeguarding against further negative effects.
Open Access
The effects of research and development expenditure on long-term stock returns: an analysis of the BRICS nations
(2022) Swan, Matthew; Charteris, Ailie
Research and development (R&D) facilitate and drive innovation, which plays a critical role in increasing competitiveness for firms and contributing to economic growth. This study examines a sample of 970 firms from Brazil, Russia, India, China and South Africa (BRICS) between 2007-2020 who increased their R&D expenditure or had an unexpected increase in R&D expenditure from one year to the next. The Fama and French (1993) three factor and Carhart (1997) four factor models are used to assess whether these firms earned abnormal returns in the long run. The study finds that value weighted portfolios of firms that increased their R&D expenditure or experienced unexpected R&D expenditure increases exhibited long term positive abnormal returns. This suggests that investors fail to respond immediately to the good news about R&D, consistent with the phenomenon of investor underreaction, and therefore presents an opportunity for market participants to earn abnormal returns by investing in BRICS companies engaged in R&D.
Open Access
The effects of strikes on the share returns of gold and platinum mining companies
(2023) Tsotetsi, Oupa Jacob; Alhassan, Latif; Charteris, Ailie
South Africa is one of the world's leading mining and minerals-processing countries, accounting for 8.2% of gross domestic product (GDP). Labour strikes are a platform that enable workers to demonstrate their dissatisfaction towards their employer concerning labour relations issues. Mining strikes in South Africa date back to 1922 and continue to occur today. The occurrences of the Global Financial Crisis of 2007 to 2009, most recently the COVID-19 pandemic and loadshedding, among others,have exacerbated South Africa's historic challenges of poverty, unemployment and inequality resulting in increases in labour strikes. This study aims to assess the effects of strikes on the share returns of gold and platinum mining companies during the period of 2010 to 2022 using the event study methodology. Secondary data from IRESS, Websites of selected mining companies and the SENS information, the annual industrial action report, newspaper articles and news feeds were used to achieve the articles' empirical analysis. A 61-day event window is used, including 30 days before and 30 days after the announcement of the strike. The effects of the announcement, settlement and duration of astrike on the share returns is tested, as well as whether the effects vary depending on whether the strikes are protected orunprotected, and for gold versus platinum mining companies. Significant negative cumulative average abnormal returns (CAARs) wereobserved during the periods of the announcement of the strike and positive returns around the settlement of the strike. The announcement CAARs for both protected and unprotected strikes were negative, meaning a decline in the share return, while the settlement results showed an increase in share return for both. The gold versus the platinum mining strikes showed a negative effect on the share return irrespective of the industry. The longer-duration strikes had a greater effect on the share return compared to the shorter-duration strikes. Based on the empirical findings, it can be concluded that strike action has a negative effect on the share returns of South African gold and platinum mining firms. The key contributions of the studyare to bridge the gap in financial markets' understanding of the effects of strikeson the share return of gold and platinum companies and the need to integrated collective bargaining to avert strikes or reduce the duration of strikes, thereby increasing investors' confidence

Browsing by Author "Charteris, Ailie"

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