- Title
- The relationship between stock market development and savings mobilization in South Africa
- Creator
- Katsande, Tamuka
- Subject
- Stock exchanges Saving and investment Financial services industry
- Date
- 2016
- Type
- Thesis
- Type
- Masters
- Type
- Economics
- Identifier
- http://hdl.handle.net/10353/11762
- Identifier
- vital:39104
- Description
- South Africa has a well-developed financial sector, particularly the stock market, which performs better than those of other developed countries. However, it is interesting to note that irrespective of the advancement in the financial sector, the country has low levels of savings. Given this background, the study empirically examined the relationship between stock market development and savings mobilization in South Africa. Employing the Autoregressive Distributed Lag (ARDL) cointegration test for the period 1990 to 2012, using quarterly time series data. Based on the McKinnon-Shaw hypothesis, which advocates that the stock market development promotes the growth rate of savings, a model linking the savings and their determinants was specified. The empirical results revealed that there is a long-term relationship between savings and the other variables including rate of interest, income, age, M3 as a percentage of GDP, bank credit to the private sector as a percentage of GDP, and stock market used in the model. It was also established that the stock market plays a positive role in mobilizing savings in South Africa. In addition, it was also found that the financial sector development has a positive relation with savings, although the interest rate was found to be negatively related to savings. The empirical results indicate that the stock market has a positive effect on savings; however, given the extent to which the financial sector is developed, South Africans in general have access to different financial products which in a way may negatively impact savings as they are net borrowers rather than savers. It is crucially important, therefore, for the general public to be advised on the use of financial products. These empirical results are supported by findings of Mavrotas and Santillana (1999), Kelly and Mavrotas (2003) Odhiambo (2006), Sahoo and Dash (2013), Kapingura and Alagidede (2014), who concluded that the stock market as one of the indicators of financial development positively influences savings.
- Format
- 94 leaves
- Format
- Publisher
- University of Fort Hare
- Publisher
- Faculty of Management and Commerce
- Language
- English
- Rights
- University of Fort Hare
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| Thumbnail | File | Description | Size | Format | |||
|---|---|---|---|---|---|---|---|
| View Details | SOURCE1 | Tamuka FINAL 8 November.pdf | 1 MB | Adobe Acrobat PDF | View Details |