Magister Commercii - MCom / The drastic decline in stock prices on the 24th October 1929 sent a frantic wave of panic across the
US. Merely a century later, on the 29th September 2008 another financial crisis hit the globe - this
time leaving most countries devastated. The main objective of this study is twofold: 1) to determine
whether leading indicators have sufficient predictive capacity to predict global financial crises;
and 2) to use the Efficient Market Theory (EMT) and/ or Behavioural Finance Theory (BFT) as a
means of developing a theory explaining the potential impact bad public announcements had on
the level of investor confidence before the 1929 Great Depression and the 2008 Global Financial
Crisis. This study was not only designed to qualitatively conceptualise the notion of the term
“investor confidence” whilst drawing special attention to its frailty using the 1929 Great
Depression and the 2008 Global Financial Crisis, but also assist governments, reserve banks and
key institutions to develop effective strategies of mitigating the effects of the latter financial crisis
as well as provide guidance on how another financial crisis can be prevented. This study extracted
bad public announcements from 40 books and 60 journal articles using 6 NBER-based leading
economic indicators (LEI) and 4 systematic risk-based leading non-economic indicators (LNEI)
in order to: 1) qualitatively assess the extent to which leading indicators can be used to predict
global financial crises 3 – 8 months in advance; and 2) use the EMT and/ or BFT to provide an
explanation concerning the potential impact that bad public announcements had on the level of
investor confidence before the 1929 Great Depression and the 2008 Global Financial Crisis.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:uwc/oai:etd.uwc.ac.za:11394/7600 |
| Date | January 2019 |
| Creators | Mungai, Ruguru |
| Contributors | Albertus, Winifred |
| Publisher | University of the Western Cape |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Rights | University of the Western Cape |
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