Determinants of household debt in South Africa
- Authors: Zimucha, Tinashe M
- Date: 2017
- Subjects: Consumer credit -- South Africa Finance, Personal -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10353/7967 , vital:31325
- Description: Significant changes have occurred in South Africa during the past decades in household saving and borrowing behaviour. The rapid increase in South Africa’s household debt over the last twenty years has been an international phenomenon. In most countries, household debt increased from the 1990s until the crisis of 2007–2008 before stabilising due to a recession and deleveraging. The study used an ARDL model to investigate the determinants of household debt in South Africa. Pairwise regression is used to select the most relevant variables affecting household regression in the country. The results of the study showed that consumer confidence, the bond market index and the vulnerability index have a positive effect on household debt. As consumers' faith in the performance of the economy increases, household debt also increases as expected, reflecting consumers' belief in increased future wealth. The positive influence of the vulnerability index suggests that households tend to resort to borrowing to smooth consumption when incomes and other related factors decline. It is recommended that national policy should tighten regulations around access to unsecured credit to minimise the stress on already vulnerable households.
- Full Text:
- Date Issued: 2017
- Authors: Zimucha, Tinashe M
- Date: 2017
- Subjects: Consumer credit -- South Africa Finance, Personal -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10353/7967 , vital:31325
- Description: Significant changes have occurred in South Africa during the past decades in household saving and borrowing behaviour. The rapid increase in South Africa’s household debt over the last twenty years has been an international phenomenon. In most countries, household debt increased from the 1990s until the crisis of 2007–2008 before stabilising due to a recession and deleveraging. The study used an ARDL model to investigate the determinants of household debt in South Africa. Pairwise regression is used to select the most relevant variables affecting household regression in the country. The results of the study showed that consumer confidence, the bond market index and the vulnerability index have a positive effect on household debt. As consumers' faith in the performance of the economy increases, household debt also increases as expected, reflecting consumers' belief in increased future wealth. The positive influence of the vulnerability index suggests that households tend to resort to borrowing to smooth consumption when incomes and other related factors decline. It is recommended that national policy should tighten regulations around access to unsecured credit to minimise the stress on already vulnerable households.
- Full Text:
- Date Issued: 2017
The impact of road construction on the livelihoods of rural communities : a case of Nyandeni Municipality in Eastern Cape, South Africa
- Authors: Ndesi, Zabambo Nale
- Date: 2017
- Subjects: Roads -- Economic aspects -- South Africa -- Eastern Cape
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10353/8769 , vital:33542
- Description: All over the world many rural households are engaged in different economic activities to sustain their livelihoods. To a large extent, a household’s ability to do this depends on access to basic assets such as infrastructure, social, human, finance or physical. Access to these assets can be affected by large projects such as road construction which can either enhance or hinder access to key assets. The main objective of the study is to investigate the impact of the construction of the N2 Wild Coast Highway in the Eastern Cape Province on the livelihoods of rural households in the Nyandeni local municipality. The study also seeks to investigate the dominant household economic activities within the municipality, factors affecting the choice of these activities and the probable impact of the construction of the N2 highway on these economic activities and livelihood strategies. The road construction is translated as a ‘shock’ in the livelihood context, hence the study further seeks to document how households respond to road construction ‘shock’ to their livelihoods, based on the findings of the study. The study applied a mixed methods approach, applying both qualitative and quantitative data. Two sources of data are used; a survey of 40 households in the Nyandeni local municipality which provided the qualitative data and survey data from the PSPPD-II quantitative data from project conducted by the Economics department at the University of Fort Hare, which provided the quantitative data. The multinomial logistic regression was used to determine the livelihood strategies used as well as the related determinants. The results showed that financial, social and physical capitals are key assets that support livelihoods in Nyandeni municipality, which were highly determined by the deprivation score, social grants and community networks. To get a clearer understanding of the underlying effects of the road construction, focus prompts interviews were also conducted. These were analysed using thematic analysis. The results showed that the road construction had both the negative and positive effects. The positive effects included better links to social facilities such as hospitals and schools as well as neighbouring municipalities. The construction also created employment for construction workers. In addition, the construction company helped households whose houses were destroyed near the road to build better houses. Although the households complained of danger from high speed vehicles because of better roads, they also indicated that the speed bumps in some areas led to an improvement in well-being especially for school children. The negative effects included destruction of burial grounds as well as the weakening of housing structures due to blasting. Further, some vegetation which was used by households as a source of livelihood was destroyed during road construction. In some cases, social capital assets were also disturbed as a result of the displacement that occurred in the process. Responses by households have been mixed, with some households taking advantage of increased access to markets as well as finances to find alternative sources of livelihoods. Households that responded negatively constantly seek out reimbursement from the government and construction company without much success.
- Full Text:
- Date Issued: 2017
- Authors: Ndesi, Zabambo Nale
- Date: 2017
- Subjects: Roads -- Economic aspects -- South Africa -- Eastern Cape
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10353/8769 , vital:33542
- Description: All over the world many rural households are engaged in different economic activities to sustain their livelihoods. To a large extent, a household’s ability to do this depends on access to basic assets such as infrastructure, social, human, finance or physical. Access to these assets can be affected by large projects such as road construction which can either enhance or hinder access to key assets. The main objective of the study is to investigate the impact of the construction of the N2 Wild Coast Highway in the Eastern Cape Province on the livelihoods of rural households in the Nyandeni local municipality. The study also seeks to investigate the dominant household economic activities within the municipality, factors affecting the choice of these activities and the probable impact of the construction of the N2 highway on these economic activities and livelihood strategies. The road construction is translated as a ‘shock’ in the livelihood context, hence the study further seeks to document how households respond to road construction ‘shock’ to their livelihoods, based on the findings of the study. The study applied a mixed methods approach, applying both qualitative and quantitative data. Two sources of data are used; a survey of 40 households in the Nyandeni local municipality which provided the qualitative data and survey data from the PSPPD-II quantitative data from project conducted by the Economics department at the University of Fort Hare, which provided the quantitative data. The multinomial logistic regression was used to determine the livelihood strategies used as well as the related determinants. The results showed that financial, social and physical capitals are key assets that support livelihoods in Nyandeni municipality, which were highly determined by the deprivation score, social grants and community networks. To get a clearer understanding of the underlying effects of the road construction, focus prompts interviews were also conducted. These were analysed using thematic analysis. The results showed that the road construction had both the negative and positive effects. The positive effects included better links to social facilities such as hospitals and schools as well as neighbouring municipalities. The construction also created employment for construction workers. In addition, the construction company helped households whose houses were destroyed near the road to build better houses. Although the households complained of danger from high speed vehicles because of better roads, they also indicated that the speed bumps in some areas led to an improvement in well-being especially for school children. The negative effects included destruction of burial grounds as well as the weakening of housing structures due to blasting. Further, some vegetation which was used by households as a source of livelihood was destroyed during road construction. In some cases, social capital assets were also disturbed as a result of the displacement that occurred in the process. Responses by households have been mixed, with some households taking advantage of increased access to markets as well as finances to find alternative sources of livelihoods. Households that responded negatively constantly seek out reimbursement from the government and construction company without much success.
- Full Text:
- Date Issued: 2017
The impact of oil price variability on the exchange rate in South Africa
- Authors: Ngonisa, Phillip
- Date: 2016
- Subjects: Foreign exchange -- South Africa -- Econometric models Petroleum products -- Prices -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10353/8261 , vital:32108
- Description: Economic theory asserts that exchange rate is a critical variable in the performance of exports and the economy at large. Equally important are variables that affect the exchange rate. In particular, economies that rely on commodity exports are vulnerable to fluctuations in commodity prices. Price volatility of such commodities can lead to significant fluctuations in exchange rates, a phenomenon referred to as commodity currencies. South Africa‘s currency has fluctuated significantly since 1994. Anecdotal evidence suggests that commodity prices may have a significant effect. Of interest is fluctuations in the oil prices, which in themselves have fluctuated greatly over the same period. This study uses a GARCH(1.1) model to investigate the impact of oil price variability on the South African exchange rate by employing the monthly data for a period spanning from January 1994 to December 2014. The results show that oil price variability affects both the level and volatility of the exchange rate. Informal evidence suggests that sovereign credit ratings are an important factor affecting the South African rand. This is supported by the results of this study. Accordingly, both variables carry important information for markets and policy makers at large.
- Full Text:
- Date Issued: 2016
- Authors: Ngonisa, Phillip
- Date: 2016
- Subjects: Foreign exchange -- South Africa -- Econometric models Petroleum products -- Prices -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10353/8261 , vital:32108
- Description: Economic theory asserts that exchange rate is a critical variable in the performance of exports and the economy at large. Equally important are variables that affect the exchange rate. In particular, economies that rely on commodity exports are vulnerable to fluctuations in commodity prices. Price volatility of such commodities can lead to significant fluctuations in exchange rates, a phenomenon referred to as commodity currencies. South Africa‘s currency has fluctuated significantly since 1994. Anecdotal evidence suggests that commodity prices may have a significant effect. Of interest is fluctuations in the oil prices, which in themselves have fluctuated greatly over the same period. This study uses a GARCH(1.1) model to investigate the impact of oil price variability on the South African exchange rate by employing the monthly data for a period spanning from January 1994 to December 2014. The results show that oil price variability affects both the level and volatility of the exchange rate. Informal evidence suggests that sovereign credit ratings are an important factor affecting the South African rand. This is supported by the results of this study. Accordingly, both variables carry important information for markets and policy makers at large.
- Full Text:
- Date Issued: 2016
The relationship between financial crises and South African bank lending activities
- Authors: Madikizela, Mfundo
- Date: 2016
- Subjects: South African Reserve Bank Global Financial Crisis, 2008-2009 South Africa -- Economic conditions
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10353/15398 , vital:40404
- Description: Financial assets, and particularly fiat money, play a critical role in the prosperity of an economy. Its health therefore becomes the cornerstone of an economy, as asserted by modern financial intermediation theory. Fundamentally, as established by literature, crises affect bank balance sheets and subsequently banks’ ability to provide credit, thereby restricting investment, capital and asset growth, aggregate output, and eventually national income. This study conclusively establishes the relationship between financial crises and the South African bank lending activities. It describes this relationship, concluding that crises and bank lending have a negative short run relationship and positive long run relationship. The study gives a brief background of recent crises that were experienced by different economies in the world. The study uses South African quarterly data for the period 1996 to 2015, where it employs a VECM model that gives empirics to the effect that lending is indeed negatively affected by financial crises, but only in the short run. This is due to the South African Reserve Bank, through its monetary policy, cushioning the banking sector against the detrimental effects of economic distress. The study recommends that given the indebtedness of South Africa relative to GDP growth, to avoid credit downgrades and disinvestment in the long run, government should focus on improving GDP growth rather than debt; and should establish a policy framework that centralises operational transactions in order to reduce the effect of crises on real output.
- Full Text:
- Date Issued: 2016
- Authors: Madikizela, Mfundo
- Date: 2016
- Subjects: South African Reserve Bank Global Financial Crisis, 2008-2009 South Africa -- Economic conditions
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10353/15398 , vital:40404
- Description: Financial assets, and particularly fiat money, play a critical role in the prosperity of an economy. Its health therefore becomes the cornerstone of an economy, as asserted by modern financial intermediation theory. Fundamentally, as established by literature, crises affect bank balance sheets and subsequently banks’ ability to provide credit, thereby restricting investment, capital and asset growth, aggregate output, and eventually national income. This study conclusively establishes the relationship between financial crises and the South African bank lending activities. It describes this relationship, concluding that crises and bank lending have a negative short run relationship and positive long run relationship. The study gives a brief background of recent crises that were experienced by different economies in the world. The study uses South African quarterly data for the period 1996 to 2015, where it employs a VECM model that gives empirics to the effect that lending is indeed negatively affected by financial crises, but only in the short run. This is due to the South African Reserve Bank, through its monetary policy, cushioning the banking sector against the detrimental effects of economic distress. The study recommends that given the indebtedness of South Africa relative to GDP growth, to avoid credit downgrades and disinvestment in the long run, government should focus on improving GDP growth rather than debt; and should establish a policy framework that centralises operational transactions in order to reduce the effect of crises on real output.
- Full Text:
- Date Issued: 2016
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