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Prof
Zhou, Sheunesu
Department: Business Management
Research Interest(s): Financial economics, Macroeconomics, Development economics
Active Research Project(s): Evaluating the impact of Government Social protection and economic interventions in response to the Covid 19 pandemic in the King Cetshwayo District Municipality.
The Growth and Development of Non-bank financial intermediation in Emerging and Developing economies.
Active Community Engagement: Social Entrepreneurship Development Programme
Economic Society of South Africa (ESSA)
Institute of Risk Management South Africa (IRMSA).
Biography: Prof Zhou is an HoD and senior lecturer in the Department of Economics. He specialises in Economics, Banking and Finance. In addition, he is also interested in working with start-up businesses, young entrepreneurs and young professionals as a business consultant and financial advisor. He has experience in teaching Economics, Banking and Finance modules at undergraduate and Honours level. Prof Zhou is also involved with supervision of Masters and Doctoral students in the Faculty. He also mentors students in competitions such as the Nedbank/Old Mutual Budget Speech competition and the CFA Research challenge, where he is the Faculty representative.
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11 results
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- Purpose The aim of this paper is to analyze the relationship between public debt, corporate debt service costs and private capital formation in South Africa. Design/methodology/approach To capture the long-run characteristic of investment, the study adopts the Fully Modified Ordinary Least Squares approach and tests for cointegration using Hansen (1992)'s Parameter Instability test. Findings We find that private capital formation increases in domestic debt and decreases in external debt during the pre-crisis period. However, during the period post the Global Financial Crisis, we find evidence of domestic public debt crowding out private capital formation, whereas external debt crowds in capital formation. Debt service costs are found to reduce investment due to the effect of the debt overhang throughout the period under analysis. Research limitations/implications The paper has important implications for macroeconomic policy. In particular, there is a need for deleveraging and allocation of a higher proportion of debt to public infrastructure expenditure, which has complementary effects on private investment. Practical implications Debt overhang signals that South African firms could be overleveraged, which hinders future growth prospects. Firms that face high levels of debt should consider debt restructuring. Originality/value Empirical studies undertaken to explore this relationship have yielded contradicting results, suggesting that the relationship between public debt and private investment is heterogeneous depending on a given economy or prevailing macroeconomic environment. In particular, existing research does not provide evidence on whether recent increases in public debt in South Africa have led to crowding-in or crowding-out of private investment. This paper therefore contributes to empirical literature.
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- Shadow banking emerged as a critical issue in advanced economies during and after the global financial crisis of 2007–2008. Its importance lies in understanding the channels through which it contributes positively to economic activity, as well as the ways in which it may undermine macroeconomic performance by propagating systemic risk. However, empirical evidence on the impact of shadow banking growth on financial stability and macroeconomic performance in emerging economies remains limited. This study contributes to the literature on financial innovation by examining the linkages between the shadow banking sector, economic performance, and financial system stability across national borders in emerging markets. The study begins with a review of literature on shadow banking, focusing on the channels through which it affects the macroeconomy, financial stability, and monetary policy. Five empirical papers, each offering a distinct contribution, analyse the impact of shadow banking on various macroeconomic and financial variables using a panel of emerging market economies. The first empirical paper employs the Pooled Mean Group technique to estimate a model in which economic growth is explained by shadow banking and other determinants. The results indicate a positive relationship between shadow banking and economic growth. The second paper examines the impact of shadow banking on bank risk across national borders using a Global Vector Autoregressive (GVAR) framework. The findings reveal increased financial fragility resulting from negative global shocks to shadow banking activity in most economies under study. Evidence of financial contagion is also observed both among emerging economies and between emerging and advanced economies. The third empirical paper investigates the relationship between shadow banking and monetary policy using a Panel Vector Autoregressive (PVAR) approach. The results show a negative relationship between the monetary policy rate and shadow bank growth, indicating that contractionary monetary policy reduces shadow banking activity. Additionally, shadow banking responds positively to increases in bank liquidity. The fourth paper explores the interaction between shadow banking, monetary policy, and bank risk-taking behaviour. The findings show that shadow banking is an important component of the monetary policy transmission mechanism in emerging economies. High levels of risk amplify the impact of monetary policy on shadow banking, whereas lower risk dampens this transmission effect. The study also finds that significant risk-taking occurs through the shadow banking channel. The fifth empirical paper investigates the impact of shadow banking activities on firm profitability in South Africa. Using single-equation cointegration methods and three measures of firm profitability, the results show that while shadow banking negatively affects traditional banks’ profitability, it has a positive impact on non-financial firms and overall firm performance. Both non-financial firms and non-bank financial institutions benefit from the expansion of shadow banking services. Based on these findings, the study recommends targeted functional regulation to support economic activity in the shadow banking sector while mitigating associated risks. Additional policy implications include the need for regulatory frameworks that monitor shadow banking to limit contagion effects across jurisdictions, support sustainable growth of shadow banking assets to enhance economic performance, and ensure effective policy coordination so that monetary policy impacts on financial markets are fully considered during policy formulation.
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- This paper seeks to analyse the impact of government debt and other macroeconomic variables on the long term bond yield for South Africa. Recent increases in the government budget deficit and its corresponding borrowing has renewed interest in understanding fiscal dynamics within the economy. The study employs both the linear and non-linear Auto-regressive distributed lag (ARDL) technique to estimate the determinants of the long-term bond yield. Our results show that the short-term interest rate is the major determinant of the long term yield in both the short-run and long-run. Government debt and the US long term yield positively impact long term bond yields both in the short- and long-run. The rate of inflation, economic growth, nominal effective exchange rate and bank credit all have negative effects on the bond yield in the long-run. Tests for non-linearity reveal that the short-term interest rate has an asymmetric relationship with the long-term bond yield. However, we only establish non-linearity between government debt and bond yields in the long-run. We suggest complementarity between monetary policy and fiscal policy, a systematic program of deleveraging and implementation of structural changes aimed at increasing production.
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- In the last decade, the populism movement has been given little effort on how it impacts employment. Most populism movements documented tend to focus on general service delivery. Considering the critical insight, the cases of employment have yielded within the broad literature of populism, this comparative study of South Africa and Botswana, both Sub-Saharan countries becomes ideal to refine and test dominant theories influencing the phenomenon. This conceptual study explored various extant studies to populism in the two countries. The study found that the populism movements of South Africa and Botswana have great influence in enforcing equality, diversity, and sound human resource policies. However, with time, the movements become more radicalised which affected the smooth flow of functioning of the businesses. The study therefore contributes to the nascent yet improving literature on the phenomenon, by systematically evaluating the populism movement targeting employment; and assessing the effects of their action on employment.
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- This paper analyzes the determinants of the South African long-term sovereign bond yield spread using 10-year bond yield spread. We employ the Auto-Regressive Distributed Lag and Flexible Least Squares techniques to demonstrate the impact of macroeconomic and financial variables on the yield spread. Our results show that the short-term interest rate is positively related to the bond yield spread both in the short and long run. We also establish a long-run positive influence of government debt on the bond yield spread whilst on the other hand, economic growth, the nominal effective exchange rate, stock market returns and bank credit all have a negative impact on the bond yield spread in the long run. We examine the time varying coefficient of government debt and reveal that the long-run impact of government debt has varied over the period under analysis. Time varying coefficients capture some important periods in the history of the South African economy, indicating that underlying economic conditions and exogenous shocks influence the determination of sovereign risk. Our results imply the need for synchronization of fiscal and monetary policy. In addition, economic policy should address economic growth and macroeconomic instability to complement deleveraging efforts aimed at curbing sovereign credit risk.
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- The COVID-19 pandemic raised the need for an increase in public services to counter the negative economic ramifications of the pandemic. However, this meteoric emergence of coronavirus inadvertently gave birth to inefficiencies entrenched in the delivery of government interventions to contain the disease and its economic effects. The purpose of this paper is to investigate the efficiency in delivery of government services and interventions aimed at ameliorating the COVID-19 pandemic. This study uses descriptive statistics and ordinal regression analysis to identify the drivers of inefficiency perceptions among recipients of social security interventions during the pandemic. Survey data for a sample of 855 participants was drawn from King Cetshwayo District municipality in KwaZulu Natal, South Africa. The key findings revealed that the delivery of most government interventions in South Africa was perceived as not well coordinated and poorly communicated, hence inefficient. Drivers of these perceptions included age, income level, race, and employment status. In addition, whether or not an individual had received some form of social security assistance during the pandemic also influenced their perceptions about government efficiency in providing social security support. We recommend strengthening monitoring and evaluation mechanisms across government service delivery initiatives and improving communication of government programs to improve user experience and access.
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- Good governance is an essential practice which brings sustainable good living standards and remains a pipedream to various countries. As such, the quest for service delivery has prompted the need for leaders at different levels, from the apex national government level to the lowest local government level, to exercise good governance. In the year 2021, over 5 464 complaints of poor service delivery were recorded in South Africa and of 257 South African municipalities, only 16 were in stable condition. However, there are limited previous studies on the relationship between good governance and service delivery. In pursuit of economic development, the purpose of this paper is to investigate good governance and show its spectre of relevance to service delivery with a view to providing lessons to South Africa. The paper dovetails with good governance and service delivery exercised in various developed countries. The study utilised a literature research approach in which the researcher gathered textbooks, seminar and workshop papers, journal articles, and both local and international newspapers and websites. The paper gives the key findings of this study which are useful to the South African Government. The Government of South Africa should develop useful initiatives to support the improvement of service quality along with the existing tools and systems that promote smooth and effective public service delivery.
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- Labour immigration has been on the rise and has had policy implications for public leaders of relatively stable Southern African Development Corporation (SADC) countries. In this paper, the status of populism and labour immigration in Botswana and South Africa was explored. The primary sources of labour immigration are Zimbabwe and Mozambique. Economic disparities and the disintegration of the socio-economic conditions of the neighbouring countries have been major antecedents for the labour movements of the masses. The study utilised a qualitative method and comparative case study design. The study found that populist movements have much influence on the termination of employment of foreign nationals in Botswana and South Africa as shown by their anti-immigrant attitudes, market protectionism, and close-the-borders protests. As these measures have become inefficient over the years, policies and proposals are recommended in response.
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- 2023| Eurasian Publication...This paper analyzes the impact of non-compliance on distribution of government support to SMMEs in the King Cetshwayo district in South Africa during the Covid 19 lockdown. We use qualitative data from semi-structured interviews and thematic content analysis to analyze the experiences and perceptions of government employees and political representatives who were involved in distributing the goods or services. Our findings show that compliance and negative attitudes towards compliance requirements were a hindrance to government interventions to ameliorate the Covid 19 pandemic induced recession. The top-down structure of the compliance system also contributed to challenges as local, national, and regional regulators were not coordinated with each other. We therefore recommend alignment of compliance requirements across the distinct levels of government (regulators), and improvement in efficiency of the regulatory system. A complete online system can be used and made accessible to local regulators to improve service delivery. In addition, compliance requirements can be relaxed during times of crises to enable access to government support by SMMEs.
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- Purpose– This study evaluates the impact of government social protection interventions on households’ welfare in South Africa. Design/methodology/approach– The study uses survey data comprising 393 observations and the multinomial logistic regression technique to analyse the effect of government interventions on households’ welfare. For robustness purposes, a negative binomial regression model is also estimated whose results corroborate the main results from the multinomial regression model. Findings– The study’s findings show that government economic interventions through social protection significantly reduce the likelihood of a decrease in household income or consumption. COVID-19 grant/social relief of distress grant, unemployment insurance, tax relief and job protection and creation are all significant in sustaining household income and consumption. Practical implications– The findings have policy implications for social development. Specifically, the findings support the use of government social protection as a safety net for low-income groups in South Africa. Originality/value–Thestudypresentspreliminaryevidenceontheeffectivenessofseveralmeasuresusedto ameliorate the COVID-19-induced recession within the South African context.
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