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- The disruptive impact of financial technology (fintech) on banks and the entire macroeconomic condition motivated this study. We investigate fintechs‘ dynamic impact on macroeconomic stability and their policy response in a panel of five emerging African economies for the period 2002-2018. The principal component analytical (PCA) technique revealed that instability among emerging Africa is more susceptible to fiscal and trade deficits with Nigeria and Algeria being the worst hit. Moreover, the forecast error variance decomposition and impulse response of the structural vector autoregressive (SVAR) estimation technique found that variability in macroeconomic instability were more susceptible to shocks from automated teller machine (ATM) adoption. Under the assumption of fixed exchange rate regime with perfect/relative capital mobility, fiscal policy was effective to restore a steady state when contemporaneous shocks from fintech threatens the economy both in the short and long-run. Although monetary policy was explosive in the short-run, it becomes effective to fintech shock in the long-run under a freely floating exchange rate assumption. The study therefore recommends a fiscal-monetary policy mix under a float-managed exchange rate system with relative capital mobility when contemporaneous shocks from fintech hit the economy.
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- The widespread financial exclusion in Africa despite the continent’s high adoption of financial technology (Fintech) suggests that there is a gap between Fintech’s adoption and its actual usefulness. This study seeks to measure Fintech’s usefulness, its growth and identify its determinants in a panel of three emerging, twenty-four frontiers and five fragile African markets for the period 2004–2018. A dummy variable interactive equation was modelled based on theory to account for heterogeneity between groups. Results from the system Generalised Method of Moments (GMM) estimation technique reveal that on average, Fintech usefulness in Africa is a dynamic heterogeneous process. Income per person, level of financial development, Fintechs’ compatibility with users’ experiences, users’ risk perception, inflation rate and financial-openness were the main determinants of its usefulness. Its rapid growth after the 2009 financial crisis suggests that greater Fintech usefulness can mitigate financial crisis among Africa markets. In particular, the growth of Mobile-banking, ATM and Internet-banking as at 2018 are on average 41.8%, 0.4%, and 20.8% respectively greater than its average in the base year 2004. The study concludes that Fintech’s usefulness is driven by economic, financial and psychological factors; therefore, structural transformation, financial development and improved literacy were recommended.
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- The extent of financial exclusion in Africa drives the adoption of fintech across the continent, but the disruption it can cause hinders progress. This study therefore assesses both the probability and actual rates of fintech adoption in 32 African economies between 2002 and 2018. Based on the information spill-over and rank theories, multiple logistic regression analysis revealed that the average probability of fintech adoption for all, emerging and frontier African economies to be 50.9%, 83.1%,and 23.1%, respectively, whereas the actual rates are 27%, 40%, and 29%, respectively. The fragile economies, however, had no reasonable probability or actual rates of fintech adoption. Further, odds ratios of 1 or more- suggest a one-unit change in the predicators will exert no impact on these rates. Thus, it is concluded that emerging economies and mobile phone banking drive fintech adoption in Africa, and is largely dependent mainly on structural changes rather than economic and financial factors. The current study consequently recommends improved literacy, ICT training, and structural changes to promote fintech across the continent.
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- This article investigates the exchange rate volatility spillover and dynamic conditional correlation between the euro and the South African rand following the Eurozone sovereign debt crisis. It employs two multivariate generalized autoregressive conditional heteroskedasticity (MGARCH) models, namely bivariate BEKK-GARCH (1,1) a nd DCC-GARCH(1,1). Based on two datasets, for the crisis and post-crisis periods, the study identifies significant uni-directional volatility spillovers from the euro to the rand during crisis and post-crisis periods. Further, increased volatility spillovers and time-varying correlations between currencies were evident during the Eurozone crisis. This suggests pure form of financial contagion between the two foreign exchange markets. As such, investors and policy makers in the stock and/or foreign exchange markets in South Africa should monitor euro volatility due to its contagious impacts on the rand and decoupling strategies should be formulated to insulate the rand from contagion. The contributions of the study are twofold. First, it informs the investors in the foreign exchange market on the extent to which shocks in the euro affect the rand. Second, it adds to the literature on pure form of contagion by testing whether there exists an asymmetric correlation between the rand and euro over tranquil periods as opposed to financial upheaval ones.
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- Experience is arguably one of the most prominent corporate governance attributes, yet studies investigating traits of corporate governance in mitigating risk-taking behavior have ignored board experience. Using the Bayesian analytical method, the present study analyzes multivariate models of corporate governance attribute (ie, board experience), corporate risk-taking and going concern of Johannesburg Stock Exchange (JSE) listed firms. The paper finds the sampled firms’ board experience to be a key attribute that influences firm’s risk-taking and going concern. Additionally, it finds that firms’ risk-taking behavior significantly impacts their going concern prospects. The findings suggest the need for a better repositioning of corporate governance in the light of board experience.
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- The poor use of innovations for financial service delivery among African banks has limited the extent of financial development in the continent. Consequently, financial authorities seeks for a technology-enabled financial solution; an area not well covered in literature. This study therefore, examines the determinants of financial development in a panel of thirty-one heterogeneous African markets for the period 2002–2019 with emphasis on financial technology (Fintech). The liquidity-preference and credit-creation theories were used to model a dummy variable interactive equation to capture possible heterogeneities. The study hypothesized that Fintech transmits directly to financial development among emerging Africa but indirectly through bank-efficiency and financial inclusion among the frontier and fragile groups, respectively. Results from both the dynamic system GMM and the static techniques support this hypothesis with significant heterogeneities in both the intercept and slope coefficients of Fintech among the various groups. The study concludes that on average, emerging African markets report higher financial depth than the frontier and fragile groups; however, with higher slopes, they can converge with emerging markets’ in the long-run through Fintech adoption. The study recommends the collaboration of Fintech with banks, improved bank efficiency and financial inclusion as panaceas to promote financial development in Africa.
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- The importance of a sound and stable financial system and by extension economic stability was brought to the fore by the global financial crisis (GFC). The economic and social costs of the GFC have renewed the commitment of stakeholders in the financial sector including central banks to develop instruments and methodologies that will be useful in monitoring financial stress within the financial system and the real economy. This study contributes to the growing literature by developing a financial stress indicator for the South African financial market. The financial stress indicator (FSI) is a single aggregate indicator that is constructed to reflect the systemic nature of financial instability and also to measure the vulnerability of the financial system to both internal and external shocks. Using the principal component analysis (PCA), the results show that financial stress can be identified by the financial stress indicator. Furthermore, using a recursive Vector Autoregression (VAR) model to estimate the impact of financial stress on output and investment, the result shows that financial stress has a negative impact on economic growth and investment, though not immediately. FSI is very useful for gauging the effectiveness of government measures to mitigate the impact of financial stress. Concerted effort to stimulate investment and domestic production by relevant stakeholders is necessary to mitigate the impact of financial stress. This will go a long way to alleviating the impact of the financial stress on industrial production, employment and the economy at large
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- The quest to get many people into higher education often crowds out the need for quality teaching and learning achievement if not backed up by resources. Narratives of recurrent concerns in the higher education sector include maintaining access to and quality of higher education, achieving a better outcome and reduce the number of students dropping out of institution. Although successes have been achieved in terms of student access to higher education, the same cannot be said of success rate. What is the weak link? How can the misalignment in the educational sector be remedied? Using ordinary least square (OLS) estimation method, empirical analysis revealed that student success depends to a large extent on the quality of input. It was evident from the study that the quantity and quality of research output significantly depend on the quality of academic staff. In view of these, various quality-enhancing investments in facilities and teacher upgrading are needed. More experienced lecturers irrespective of their nationality need to be employed to continually support teaching and learning. The higher education sector needs to internalize the fact of underpreparedness of high school learning graduates and make a proper corrective mechanism to upgrade their skills to contend higher education learning.
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- This paper identified and explored the factors influencing Bitcoin adoption and use in South Africa. Background Since its introduction in 2008, the value and popularity of Bitcoin has risen exponentially. Captivating the eyes of the world, from regulators to economists, Bitcoin promises to revolutionize the digital currency space. Despite being over 10 years old, the concept of cryptocurrency is fairly new in South Africa, a developing country. South African's interest in Bitcoin continues to grow with the country constantly ranking within the top 10 in online searches for" Bitcoin" and" cryptocurrency" on Google. The primary objective of this research was to identify adoption factors amongst South African citizens, an area that has not received much research focus in the past. In addition to this, the study aimed to identify how Bitcoin is primarily used in South Africa. Methodology A survey-based questionnaire was utilized to obtain responses from adopters of Bitcoin in South Africa. The quantitative survey was completed by 204 respondents. Contribution This research contributes to the body of knowledge relating to Bitcoin adoption, specifically from a developing country. Adoption factors are identified that can be utilized by businesses that intend to adopt cryptocurrency, to strategically prepare for the potential risks or opportunities brought about by Bitcoin and cryptocurrency in general. Findings The findings of this study indicate that while perceived usefulness, perceived ease of use, subjective norms, and facilitating conditions positively influence intention to adopt Bitcoin, trust was the only construct that is statistically significant and hence is the greatest driver of adoption in South Africa. In terms of its primary use in South Africa, the study revealed that Bitcoin is used as a speculative instrument for short-term trading in South Africa followed by being used as a long-term investment in the crypto-asset class. No respondent indicated that they utilize Bitcoin as a payment method in South Africa. Recommendations for Practitioners When developing crypto-based investment products, custodians of assets must ensure that a minimum-security protocol is followed to safeguard these assets. This will enhance the trust that potential investors and customers have in their systems and products. Recommendations for Researchers This study focused on adoption factors for South African citizens. Future studies should be conducted to identify adoption factors by businesses in South Africa. Impact on Society Bitcoin offers an alternate trading instrument and investment option, with the possibility of large gains over a relatively short period. Bitcoin also presents the possibility of cross-border transactions at a significantly lower cost compared to traditional cross-border transfers of funds. Future Research Studies should be conducted to explore the factors influencing the adoption of altcoins to determine if the technological differences influence the adoption of one currency over the other. Research should also be conducted comparing the taxation of cryptocurrency in various countries around the world.
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