Financial development, income inequality and poverty: case of a selected SADC countries
- Authors: Leve, Samkele
- Date: 2019
- Subjects: Finance Economic development Income distribution
- Language: English
- Type: Thesis , Masters , MCom (Economics)
- Identifier: http://hdl.handle.net/10353/16918 , vital:40785
- Description: The financial sector plays a pivotal role in an economy of a country; hence the importance of financial development cannot be underestimated. Financial development is widely regarded as another conduit through which income inequality and poverty can be alleviated, however both theoretical and empirical literature does not reach consensus on the effect of financial development on income inequality and poverty. Against this background, the study empirically examines the effect of financial development on income inequality and poverty in selected Southern African Development Community (SADC) countries, employing the Generalised Method of Moments (GMM) technique for the period 1980 to 2011. Based on the inequalitydecreasing and Mckinnon Conduit effect, two models which link financial sector development and inequality and financial sector development and poverty were estimated using five different dimensions of financial development. Empirical results revealed that financial development overall does have an impact on income inequality and poverty in the selected SADC countries. An interesting observation from the empirical results is that the actual dimension of financial development plays a significant role in determining the relationship between financial development, income inequality and poverty in the SADC region. The impact of financial depth on poverty is not obvious in the study, depending on the variable used. On the relationship between financial system stability, income inequality and poverty, results reveal that a stable financial system is beneficial to the poor. Financial efficiency does not appear to have a significant role in reducing income inequality and poverty in the selected SADC countries. Overall, the findings from the study indicate that financial access or financial inclusion and financial stability is what reduces poverty instead of mere financial sector development at a broader level.
- Full Text:
- Date Issued: 2019
- Authors: Leve, Samkele
- Date: 2019
- Subjects: Finance Economic development Income distribution
- Language: English
- Type: Thesis , Masters , MCom (Economics)
- Identifier: http://hdl.handle.net/10353/16918 , vital:40785
- Description: The financial sector plays a pivotal role in an economy of a country; hence the importance of financial development cannot be underestimated. Financial development is widely regarded as another conduit through which income inequality and poverty can be alleviated, however both theoretical and empirical literature does not reach consensus on the effect of financial development on income inequality and poverty. Against this background, the study empirically examines the effect of financial development on income inequality and poverty in selected Southern African Development Community (SADC) countries, employing the Generalised Method of Moments (GMM) technique for the period 1980 to 2011. Based on the inequalitydecreasing and Mckinnon Conduit effect, two models which link financial sector development and inequality and financial sector development and poverty were estimated using five different dimensions of financial development. Empirical results revealed that financial development overall does have an impact on income inequality and poverty in the selected SADC countries. An interesting observation from the empirical results is that the actual dimension of financial development plays a significant role in determining the relationship between financial development, income inequality and poverty in the SADC region. The impact of financial depth on poverty is not obvious in the study, depending on the variable used. On the relationship between financial system stability, income inequality and poverty, results reveal that a stable financial system is beneficial to the poor. Financial efficiency does not appear to have a significant role in reducing income inequality and poverty in the selected SADC countries. Overall, the findings from the study indicate that financial access or financial inclusion and financial stability is what reduces poverty instead of mere financial sector development at a broader level.
- Full Text:
- Date Issued: 2019
The nexus between capital inflows and credit growth in South Africa
- Authors: Davani, Siviwe
- Date: 2019
- Subjects: Capital movements Credit
- Language: English
- Type: Thesis , Masters , MCom (Economics)
- Identifier: http://hdl.handle.net/10353/16885 , vital:40782
- Description: This study examines the effect of capital inflows on credit growth on the South African economy. Capital inflows ease the constraint of the low domestic savings in the domestic economy. The study employed the Structural Vector Auto Regression model to analyse the relationship between the variables of interest. The findings of the study indicate that the two types of capital inflows employed in the study, Foreign Direct Investment and Foreign Portfolio investment have a significant effect on credit growth in the long-run. The results also indicate that there are other important factors such as macroeconomic stability and political stability which have a significant effect of capital inflows into South Africa. Overall, the results revealed that a greater variation of credit growth is explained by GDP. This indicates that there is a link between GDP and FDI and FPI given their link with credit growth. These results also suggest that the foreign capital channel can be another channel which may affect growth in the domestic economy in the event that there are negative innovations which affects capital flows to South Africa. The study thus suggests that policies which ensures macroeconomic stability and political stability should be pursued given their influence on capital inflows into South Africa. Also it’s recommended that the country mobilise domestic resources to ensure sustainable development
- Full Text:
- Date Issued: 2019
- Authors: Davani, Siviwe
- Date: 2019
- Subjects: Capital movements Credit
- Language: English
- Type: Thesis , Masters , MCom (Economics)
- Identifier: http://hdl.handle.net/10353/16885 , vital:40782
- Description: This study examines the effect of capital inflows on credit growth on the South African economy. Capital inflows ease the constraint of the low domestic savings in the domestic economy. The study employed the Structural Vector Auto Regression model to analyse the relationship between the variables of interest. The findings of the study indicate that the two types of capital inflows employed in the study, Foreign Direct Investment and Foreign Portfolio investment have a significant effect on credit growth in the long-run. The results also indicate that there are other important factors such as macroeconomic stability and political stability which have a significant effect of capital inflows into South Africa. Overall, the results revealed that a greater variation of credit growth is explained by GDP. This indicates that there is a link between GDP and FDI and FPI given their link with credit growth. These results also suggest that the foreign capital channel can be another channel which may affect growth in the domestic economy in the event that there are negative innovations which affects capital flows to South Africa. The study thus suggests that policies which ensures macroeconomic stability and political stability should be pursued given their influence on capital inflows into South Africa. Also it’s recommended that the country mobilise domestic resources to ensure sustainable development
- Full Text:
- Date Issued: 2019
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