Capital Flows Credit Markets And Growth In South Africa
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Capital Flows Credit Markets And Growth In South Africa
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Author : Nombulelo Gumata
language : en
Publisher: Springer Nature
Release Date : 2019-12-11
Capital Flows Credit Markets And Growth In South Africa written by Nombulelo Gumata and has been published by Springer Nature this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-12-11 with Business & Economics categories.
This book examines the dynamics in capital flows, credit markets and growth in South Africa. The authors explore the role of global economic growth, policy shifts and various economic policy uncertainties. Central banks in advanced economies are engaged in unconventional monetary policy tools such as balance sheet policies, negative interest rates and extended forward guidance to assist them to meet their price, financial and macro-economic stability objectives. This book determines whether BRICS GDP growth is a source of shocks or an amplifier of global growth shocks. The authors find that global economic growth and policy uncertainty reinforce each other via capital flows, credit conditions and business confidence on the domestic economy. Furthermore, they demonstrate that there is momentum in the changes in the spread between the repo rate and federal funds rate. In addition, global real policy rates impact domestic GDP growth and labor market conditions. The authors examine the economic costs of capital flow surges, sudden stops and elevated portfolio volatility shocks and their interaction with GDP growth and credit. They show that equity and debt inflows matter in the attainment of the price stability mandate. Moreover, business confidence transmits sovereign credit ratings upgrades and downgrades shocks to the real economy via GDP growth, the cost of government debt and borrowing to impact credit growth. High GDP growth increases the likelihood of sovereign credit ratings upgrades, hence policymakers should implement pro-growth policies. Inflation regimes impact the transmission of positive nominal demand shocks to the price level. Low and stable inflation (inflation below 4.5 per cent) reduces the pass-through of positive nominal demand shocks to inflation.
Bank Credit Extension And Real Economic Activity In South Africa
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Author : Nombulelo Gumata
language : en
Publisher: Springer
Release Date : 2017-03-13
Bank Credit Extension And Real Economic Activity In South Africa written by Nombulelo Gumata and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-03-13 with Business & Economics categories.
This book presents empirical evidence that supports and facilitates a practical, integrated approach to how bank regulatory and selected macro-prudential tools interact with monetary policy to achieve price and financial stability. The empirical results contained in various chapters accompany in-depth historical analysis and counterfactual scenarios that enable proper policy evaluation and the interaction of bank regulatory, macro-prudential and monetary policy tools in South Africa. The presented evidence also identifies financial asset boom and bust episodes and the associated costly output losses. In addition, the authors explore the amplification of credit dynamics by commodity prices and sector credit re-allocation due to capital inflows shocks. The book’s empirical analysis uses a wide range of statistical and econometric approaches on granular data and economic variables to derive policy implications and recommendations. This in-depth quantitative analysis includes determining inverse transmission of global liquidity, as well as the effects of capital flows, lending-rate margins, financial regulatory uncertainty, the National Credit Act, bank capital-adequacy ratios, bank loan loss provisions, loan-to-value ratios and repayment-to-income ratios on the macro-economy.
The Composition Of Capital Flows
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Author : Mr.Norbert Funke
language : en
Publisher: International Monetary Fund
Release Date : 2005-03-01
The Composition Of Capital Flows written by Mr.Norbert Funke and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005-03-01 with Business & Economics categories.
Over the past decade, South Africa has attracted relatively little foreign direct investment (FDI), but considerable amounts of portfolio inflows. In this context, the objective of the paper is twofold: to identify the determinants of the level and composition of capital flows to emerging markets and to draw policy conclusions for South Africa. We estimate a dynamic panel for up to 81 emerging markets using GMM (Generalized Method of Moments) techniques. The results suggest that further trade and capital control liberalization would increase the share of FDI. Additionally, a reduction in exchange rate volatility would affect the composition of capital flows in favor of FDI.
Analyzing Capital Flow Drivers Using The At Risk Framework South Africa S Case
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Author : Rohit Goel
language : en
Publisher: International Monetary Fund
Release Date : 2021-10-22
Analyzing Capital Flow Drivers Using The At Risk Framework South Africa S Case written by Rohit Goel and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-10-22 with Business & Economics categories.
Cross-border capital flows are important for South Africa. They fund the nation’s relatively large external financing needs and have important financial stability implications evidenced by the large capital outflows and asset price selloffs during the COVID-19 pandemic. This paper adds to the literature on the drivers of South Africa’s capital flows by applying the ‘at-risk’ framework––which differentiates between the likelihood of “extreme” inflows (surges) and outflows (reversals) and of “typical” flows––to both nonresident and resident capital flows. Estimated results show that among nonresident flows, the portfolio debt component is most sensitive to changes in external risk sentiment particularly during reversals. This applies to flows to the sovereign sector. Nonresident equity flows, both portfolio and FDI, are most sensitive to domestic economic activity especially during surges. This applies to flows to the corporate and banking sectors. Results also suggest that resident flows, in particular the FDI component, tend to offset nonresident flows, thus acting as buffers against funding withdrawal during periods of global risk aversion.
Policy Responses To Capital Flows In Emerging Markets
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Author : Mahmood Pradhan
language : en
Publisher: International Monetary Fund
Release Date : 2011-04-20
Policy Responses To Capital Flows In Emerging Markets written by Mahmood Pradhan and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-04-20 with Business & Economics categories.
Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.
Managing Volatile Capital Flows Experiences And Lessons For Sub Saharan African Frontier Markets
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Author : Cheikh A. Gueye
language : en
Publisher: International Monetary Fund
Release Date : 2014-03-26
Managing Volatile Capital Flows Experiences And Lessons For Sub Saharan African Frontier Markets written by Cheikh A. Gueye and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-03-26 with Business & Economics categories.
During the past three years the frontier markets of sub-Saharan Africa have received growing amounts of portfolio capital flows, with heightened interest from foreign investors. Compared with foreign direct investment, portfolio capital flows tend to be more volatile, and thus pose challenges for sub-Saharan African frontier markets. This study examines the evolution of capital flows since 2010 and discusses the policies these countries have designed to reduce risks from the inherent volatility of these flows.
The Determinants Of Stock Market Development In Emerging Economies
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Author : Charles Amo Yartey
language : en
Publisher: International Monetary Fund
Release Date : 2008-02
The Determinants Of Stock Market Development In Emerging Economies written by Charles Amo Yartey and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008-02 with Business & Economics categories.
This paper examines the institutional and macroeconomic determinants of stock market development using a panel data of 42 emerging economies for the period 1990 to 2004. The paper finds that macroeconomic factors such as income level, gross domestic investment, banking sector development, private capital flows, and stock market liquidity are important determinants of stock market development in emerging market countries. The results also show that political risk, law and order, and bureaucratic quality are important determinants of stock market development because they enhance the viability of external finance. This result suggests that the resolution of political risk can be an important factor in the development of emerging stock markets. The analysis also shows the factors identified above as determining stock market development in emerging economies can also explain the development of the stock market in South Africa.
Global Growth And Financial Spillovers And The South African Macro Economy
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Author : Mthuli Ncube
language : en
Publisher: Springer
Release Date : 2016-04-29
Global Growth And Financial Spillovers And The South African Macro Economy written by Mthuli Ncube and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-04-29 with Business & Economics categories.
To what extent is South Africa affected by G8 economies and BRIC growth shocks? This book identifies channels that amplify these shock effects, the relevance of third country transmission effects and the effects of the first and second rounds of US quantitative easing. The changing reactions of South African variables over time to financial shocks emanating from the US and selected countries in the Euro area, is presented. The book quantifies the effects of capital flow shocks, determines the counterfactuals of asset prices and economic growth variables, and compares the contribution of capital flows and domestic macro factors on asset prices. The effects of the exchange rate depreciation are contrasted to the decline in investment as key drivers of the trade balance. Stock market interdependence is determined amongst South African, Indian and Brazilian equities. The contributions of stock price returns and volatility on South African economic growth are contrasted. The authors construct a financial stress index for South Africa and determine how it amplifies shocks.
Real Effects Of Capital Inflows In Emerging Markets
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Author : Ms.Deniz O Igan
language : en
Publisher: International Monetary Fund
Release Date : 2016-12-06
Real Effects Of Capital Inflows In Emerging Markets written by Ms.Deniz O Igan and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-12-06 with Business & Economics categories.
We examine the association between capital inflows and industry growth in a sample of 22 emerging market economies from 1998 to 2010. We expect more external finance dependent industries in countries that host more capital inflows to grow disproportionately faster. This is indeed the case in the pre-crisis period of 1998–2007, and is driven by debt, rather than equity, inflows. We also observe a reduction in output volatility but this association is more pronounced for equity, rather than debt, inflows. These relationships, however, break down during the crisis, hinting at the importance of an undisrupted global financial system for emerging markets to harness the growth benefits of capital inflows. In line with this observation, we also document that the inflows-growth nexus is stronger in countries with well-functioning banks.
Exchange Rate Flexibility And Credit During Capital Inflow Reversals
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Author : Mr.Nicolas E. Magud
language : en
Publisher: International Monetary Fund
Release Date : 2014-04-16
Exchange Rate Flexibility And Credit During Capital Inflow Reversals written by Mr.Nicolas E. Magud and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-04-16 with Business & Economics categories.
We document the behavior of macro and credit variables during episodes of capital inflows reversals in economies with different degrees of exchange rate flexibility. We find that exchange rate flexibility is associated with milder credit growth during the boom but, even though smaller than in more rigid regimes, it cannot shield the economy from a credit reversal. Furthermore, we observe what we dub as a recovery puzzle: credit growth in economies with more flexible exchange rate regimes remains tepid well after the capital flow reversal takes place. This results stress the complementarity of macro-prudential policies with the exchange rate regime. More flexible regimes could help smoothing the credit cycle through capital surchages and dynamic provisioning that build buffers to counteract the credit recovery puzzle. In contrast, more rigid exchange rate regimes would benefit the most from measures to contain excessive credit growth during booms, such as reserve requirements, loan-to-income ratios, and debt-to-income and debt-service-to-income limits.