South Africa is endowed with a well-developed and regulated financial system which compares favourably with those of other developed economies. Therefore the financial sector is intended to play a significant role in supporting the real economy, by enhancing trade and stimulating economic growth and development. Despite the existence of a stable, developed and well-regulated financial sector, the South African economy has experienced current account deficits for the past 10 years and economic growth rates have mostly trailed behind the targets prescribed by the socio-economic programs formulated and implemented since 1994. To solve the trade – financial development – economic growth nexus problem, most studies have focused on other countries while research studies on South Africa did not explicitly investigate the trade – financial development – economic growth triangle, the linkage which failed to yield the desired outcome for South Africa’s post 1994 era.Therefore, this study employs Cointegration Vector Autoregressive (CVAR) methodology to investigate the relationship between trade, financial development and economic growth in South Africa. The unit root test revealed that the variables considered in the study are I(1) variables and the Johansen cointegration test justified the existence of a long run relationship among the variables. The empirical findings indicate that imports and financial development are positively related to exports whilst economic growth is negatively related to exports. The VAR Ganger causality test has shown that there is a uni-directional causality running from financial development to economic growth, exports and imports and that imports Granger cause exports. The results of this study form the basis for further investigation into the non-performance of exports and economic growth in the nexus. The research study opens up new policy insights by suggesting that financial policy can be used to be more supportive to the production of intermediate and finished products destined for both international and domestic markets.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:nmmu/vital:27175 |
| Date | January 2017 |
| Creators | Zhanje, Stephen |
| Publisher | Nelson Mandela Metropolitan University, Faculty of Business and Economic Sciences |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis, Masters, MPhil |
| Format | xviii, 196 leaves, pdf |
| Rights | Nelson Mandela Metropolitan University |
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