Masters Degrees (DE)

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An analysis of the nexus between public debt and private investment: Evidence from Namibia
(University of Namibia, 2022) Ngwena, Ester Ndapandula N.
Public debt in Namibia has been rising over the years and the question is whether the persistently high debt level can negatively affect private gross fixed capital formation or not. Applying the Autoregressive Distributed Lag (ARDL) model for cointegration on data for the period 2010Q1 to 2019Q4, this study empirically examined the nexus between public debt and private gross fixed capital formation in Namibia. The ARDL test results revealed the existence of a long-run relationship between the variables. Domestic debt and interest rate were found to have a statistically significant negative effect on private gross fixed capital formation in the long-run. These findings are consistent with the Classical and Neoclassical Views, which state that domestic debt crowds-out private investment. Moreover, the Granger Causality test was employed as a confirmatory test to determine the direction of causality between public debt and private gross fixed capital formation. The Granger Causality test results show the presence of no causality between public debt and private investment in Namibia. A bi-directional relationship was, however, found to exist between interest rate and private gross fixed capital formation. Moreover, a statistically significant bi-directional causal relation was also discovered between gross domestic product and gross fixed capital formation. Policy implications from these findings are that proper debt management to support private gross fixed capital formation in Namibia is fundamental. Furthermore, the newly established revenue agency could create new avenues to raise funds to widen the revenue base. Finally, the government could moderately increase external borrowing, albeit with caution, as external debt can be susceptible to external shocks, which affect debt service cost
Analysing the effects of interest rate and reserve requirement ratio on bank credit risk in Namibia
(University of Namibia, 2020) Andreas, Aili
The study assessed the effect of monetary policy instruments (interest rates and reserve requirements) on banking institutions risk, measured in terms of non-performing loans. The study used quarterly data from Bank of Namibia from 2001 Qi to 2017Q3. The study employed the Autoregressive Distributive Lag (ARDL) lag model to determine the effects. Since the reserve requirements is seldom used in Namibia and ever kept at one percent of the bank's total liabilities to the public, it was considered dormant. Therefore, shocking the reserves requirements up-or down-wards is not plausible in the Namibian economy. The variables considered are non-performing loans (NPL), as a dependent variable and interest rates (I), banks tier I capital (CA), banks ' total assets (TAJ, gross domestic product (GDP), and private credit extension (CR); as the explanatory variables. The results indicate that there is a short run negative effect between interest rates and bank risk, which implies that the low rate would increase the bank 's non-performing loans. The negative relationship indicates that low inflation or price stability does not guarantee financial stability in the economy. The Granger causality results indicate non-causality between interest rates and bank risk, but interest rates Granger cause economic growth and private sector credit that have a direct effect to bank risks.
Analysing the effects of interest rate and reserve requirements ratio on bank credit risk in Namibia
(University of Namibia, 2020) Andreas, Aili
The study assessed the effect of monetary policy instruments (interest rates and reserve requirements) on banking institutions risk, measured in terms of non-performing loans. The study used quarterly data from Bank of Namibia from 200IQJ to 2017Q3. The study employed the Auto regressive Distributive Lag (ARDL) lag model to determine the effects. Since the reserve requirements is seldom used in Namibia and ever kept at one percent of the bank 's total liabilities to the public, it was considered dormant. Therefore, shocking the reserves requirements up-or down-wards is not plausible in the Namibian economy. The variables considered are non-performing loans (NPL), as a dependent variable and interest rates (!), banks tier I capital (CA), banks ' total assets (TA), gross domestic product (GDP), and private credit extension (CR); as the explanatory variables. The results indicate that there is a short run negative effect between interest rates and bank risk, which implies that the low rate would increase the bank's non-performing loans. The negative relationship indicates that low inflation or price stability does not guarantee financial stability in the economy. The Granger causality results indicate non-causality between interest rates and bank risk, but interest rates Granger cause economic growth and private sector credit that have a direct effect to bank risks.
Analysing the exchange rate volatility relative to trade balance: The case of SACU countries
(University of Namibia, 2019) Mazuba, Haansende Christine
The term exchange rate volatility is widely used in the financial market. The exchange rate is determined in the foreign exchange market, which is said to be the largest market in the world and it trades financial assets. Many studies have shown that researchers, relevant practitioners and policy makers pay lots of attention to the issue of exchange rate and volatility. Volatility is known to be very important when it comes to making decisions in financial trading activities that are based on fluctuations on return. This study has two main objectives, namely to analyse the kind of relationship between exchange rate volatility and trade balance in the selected member states of the SACU region, namely Botswana, Namibia, Swaziland and South Africa. The second objective of this study was to determine the impact between exchange rate volatility and trade balance in the selected member states of the SACU region. The time series data which was used in this study was from the period 1986 to 2016. The Generalized Autoregressive Conditional Heteroscedasticity (GARCH) model, the impulse response functions and variance decompositions are used in the analysis. Results show that there is a short-run relationship between exchange rate volatility and trade balance. It was found that there is a negative impact between these two variables, with high volatility. Furthermore, this study recommends all Central Banks in the SACU region to intervene in order to mitigate exchange rate volatility.
Analysing the relationship between budget deficit and current account deficit in Namibia
(University of Namibia, 2018) Shifidi, Achiles Nafimakekwe
One of macro-economic theories suggests that there exists a causal relationship running from budget deficit to current account deficit, and this concept is referred to as the Twin Deficit Hypothesis. Previous studies on the twin deficit hypothesis generated mixed findings. Some of the studies supports the hypothesis while others do not. This study is aimed at analysing the relationship between budget deficit and current account deficit in Namibia, while taking into account interest and exchange rates as intermediating variables in the transmission mechanism. The study used the quarterly time series data covering the period 1990 first-quarter to 2014 quarter-four. The study employs the following variables; budget balance, current account balance, exchange rate, and interest rate. The Unrestricted Vector auto Regression technique was employed to analyse the relationship. The result shows that budget deficit does influence current account deficit in Namibia. However, interest rate and exchange rate were insignificant in influencing both current account and budget balance. The results supports the Keynesian theory that there is a positive uni-directional relationship between budget deficit and current account deficit, and the direction of causality runs from budget deficit to current account deficit. It is therefore, recommended that the Government of the Republic of Namibian should maintain a favourable budget balance in order to improve current account balance.
Analysing the relationship between real exchange rate misalignment and capital flow in Namibia
(University of Namibia, 2018) Nghinamupika, Isabel Ndshipanda
The paper analysed the relationship between real exchange rate misalignment and capital flow in Namibia during the period 1993Q1 - 2015Q4. Namibia has a fixed exchange rate regime which is prone to speculative attack, moreover, a devaluation or undervaluation is the major cause of capital outflow which hinders economic growth. Thus, the estimation of the equilibrium RER and misalignment is essential. The study employed time-series techniques such as the unit root test, autoregressive distributed lag bound test to co-integration, error correction modelling approach, diagnostic and stability test. The inflexion point of misalignment was also used to find the effects of real exchange rate misalignment on capital flow in the country. The error correction model results showed amongst others that the terms of trade, inflation rate, interest rate differential and GDP are positively and insignificantly associated with capital flow. On the other hand, the real exchange rate misalignment had a negative and insignificant effect on capital flow. Many policy recommendations were drawn from the research findings. Firstly, policy makers could improve the exchange rate and the management of the REER misalignment thereby promoting the competitiveness of commodities. Secondly, the focus of policy reform could also be on creating a conducive investment atmosphere so as to entice foreign capital and encourage domestic investment. Moreover, restrictions could also be placed on capital outflow in an attempt to ease the effect on the exchange rate.
An analysis of electricity demand in Namibia
(2009) Kavezeri, Kasnath J.
This study analyze the demand for electric ity in Namibia as a function of income and the price of electricity, using quarterly data from 1993 :QI to 2006 :Q4. The tudy employs various econometric techniques such a unit root tests and the Engle-Granger approach to testing cointegration so as to establish the long-run relationship between the variables. lt also applies an Error Correction Model (ECM) to cater for the short-run dynamics and to verify the long-run, or equilibrium relationship suggested by the cointegration test. The results show a significant impact of changes in income on the demand for electricity in both the long- and the short-run. Income elasticity is above unity ( 1.02) in the long-run and i 0.33 in the short run. Price, on the other hand, has the correct sign
An analysis of financial development and economic growth nexus evidence from the South African Development Community
(University of Namibia, 2022-04) Mufika, Diladileni Sabina
While there is vast evidence on finance-growth literature, the lack of consensus in the literature calls for continuous, renewed and more robust evidence. This study extends the empirical analysis of finance-growth nexus, by examining the possible non-linear relationship that could exist for the SADC region. The study analysed the impact of financial development on economic growth using annual panel dataset for 16 SADC countries from the period 1995 to 2019. The study used three proxies for financial development, namely, broad money, domestic credit to private sector, and domestic credit to private sector by banks. The study employed the system generalized method of moments (SYGMM) to address panel estimation problems, such as the presence of unobserved country specific effects, common time effects and potential endogeneity. The study found that liquid liabilities and domestic credit to the private sector have a negative and significant relationship with economic growth. The study found no non-linear relationship between financial development and economic growth when domestic credit to the private sector and liquid liabilities are considered. However, the results suggest an inverse U-shaped relationship between domestic credit to the private sector and economic growth. The results show a uni-directional causality between economic growth and financial development, confirming the demand-following hypothesis in the SADC region. For SADC to support growth through financial development, there is need to promote reforms that will address factors hindering the potentials of financial development in stimulating growth. This includes adopting appropriate policies that improve innovative financial infrastructure and promoting sound regulatory frameworks. In addition, it is recommended that pro-growth policies be strengthened so that growth subsequently pulls with it financial development.
An analysis of macroeconomic determinants of banking sector development in Namibia
(2014) Shifotoka, Maria N.
This study carries out an empirical investigation of the determinants of banking sector development in Namibia. The study uses quarterly data for Namibia covering the period of 2000: I to 2011: IV, obtained from the Bank of Namibia. The indicator that is used to represent banking sector development is the ratio of credit extended to the private sector by the banks to gross domestic product (GDP). The study uses the autoregressive distributed lag model (ARDL) for the analysis. The bounds test for cointegration is used to test whether a long run relationship exists between the included variables. In addition, an ARDL framework is also used to test whether any of the included variables: real gross domestic product, nominal interest rates, inflation and the ratio of market capitalisation to nominal gross domestic product as a proxy of stock market development, impacts development in the banking sector. The main result from the study is that a long run relationship exists between the variables. Secondly, the estimated coefficients for the variables impacting banking sector development have expected signs. Real GDP, nominal interest rates positively influence banking sector development, while inflation is found to negatively impacts banking sector development. Stock market development is insignificant in determining banking sector development. The results suggest that developing the real sector without keeping interests rates too low could benefit the banking sector development.
An analysis of macroeconomic determinants of house price volatility in Namibia
(University of Namibia, 2019) Kamati, Katrina Namutenya
The housing sector plays a significant role in the economy. However, house prices are presumed to be more volatile than other goods and services, because of their high demand. This study aimed to conduct an empirical analysis of the determinants of house price volatility in Namibia. Moreover, the direction of causality between house price volatility and the macroeconomic determinants was examined. The ARCH and GARCH models together with the VAR/VECM approaches were used to analyse quarterly data from 2007 quarter 1 to 2017 quarter 2. The findings show that house prices in Namibia are volatile and the volatility is highly persistent. A long run relationship was established between house price volatility and the macroeconomic determinants. It was further established that volatility itself, GDP and mortgage loans significantly determine house price volatility. In addition, a unidirectional causality from GDP and mortgage loans to house price volatility was found. The IRF analysis showed that shocks to the selected macroeconomic variables, except the prime lending rate magnify volatility. The VDC analysis also confirmed that mortgage loans and current volatility are the most significant variables that explain variation in house price volatility. Policymakers should, therefore, monitor macroeconomic factors closely and ensure that the economy is growing to mitigate the issues of house price volatility.
An analysis of macroeconomic determinants of remittances in Southern Africa
(University of Namibia, 2018) Singogo, Fwasa K.
The study analyzed macroeconomic determinants of remittances in Southern Africa and made use of annual data for the period ranging from 2003 to 2016. The macroeconomic determinants used include: remittances themselves, the inflation rate, GDP growth rate, the nominal exchange rate, broad money and age dependency ratio. In doing so, the study further analyzed cyclicality and the volatility of remittances in the region in order to get a more rounded perspective. In seeking to meet its objectives, a panel study was carried out using both the fixed and random methods of which the random method was found to be most appropriate. The Southern African countries included in the study were Botswana, Lesotho, Malawi, Mozambique, South Africa, Swaziland and Zambia. Other major tests applied included a Standard deviation test for volatility; the Hodrick Prescott (HP) filter with detrended series, to analyze for cyclicality; and cross correlation tests to determine if there existed pro or counter cyclical behavior. The study found that amongst the macroeconomic determinants used; only GDP growth (changes/improvements in the home countries’ economic environment) and the exchange rate were statistically significant with respective positive relationships with remittance inflows. It was also found that volatility of remittances was low, which was evidently reflected in the values of the standard deviations with the highest being 1.784. In regards to cyclicality, the tests exhibited prominence of pro cyclical behavior which could imply that migrants optimize placement of their savings between origin and destination countries of which the remitting of funds is a form of investment. However, several periods of counter cyclicality were observed that made it hard to out-rightly conclude pro cyclicality as being the definite trend.
Analysis of the determinants of exchange rate volatility in the SACU region
(University of Namibia, 2020) Nyandoro, Winnie Vina
The currencies of the five SACU countries have experienced notable volatility in the last decade. The purpose of this study therefore, was to identify the determinants of exchange rate volatility in the SACU region and also to determine ifthere is a long run relationship between exchange rate volatility and its determinants. The study used annual time series data from 1980 to 2017. This study uses the generalised autoregressive conditional heteroscedasticity GARCH (1 , I) approach. The results from the study revealed that interest rates and inflation were both significant factors in explaining exchange rate volatility in Lesotho. Interest rates were also found to be a determinant of exchange rate volatility in Namibia. For South Africa, Swazi land and Botswana, inflation and interest rates were not significant in explaining exchange rate volatility. Policy makers in the region should therefore start considering the possibility of macro-economic policy independence going forward . In Lesotho, targeted inflation may go a long way in reducing exchange rate volatility. In Namibia and Lesotho, there is also room to explore the possibility of changing the interest rates time and again with the aim of reducing exchange rate volatility.
Analysis of the determinants of exchange rate volatility in the SACU region
(University of Namibia, 2019) Nyandoro, Winnie Vina
The currencies of the five SACU countries have experienced notable volatility in the last decade. The purpose of this study therefore, was to identify the determinants of exchange rate volatility in the SACU region and also to determine if there is a long run relationship between exchange rate volatility and its determinants. The study used annual time series data from 1980 to 2017. This study uses the generalised autoregressive conditional heteroscedasticity GARCH (1, 1) approach. The results from the study revealed that interest rates and inflation were both significant factors in explaining exchange rate volatility in Lesotho. Interest rates were also found to be a determinant of exchange rate volatility in Namibia. For South Africa, Swaziland and Botswana, inflation and interest rates were not significant in explaining exchange rate volatility. Policy makers in the region should therefore start considering the possibility of macro-economic policy independence going forward. In Lesotho, targeted inflation may go a long way in reducing exchange rate volatility. In Namibia and Lesotho, there is also room to explore the possibility of changing the interest rates time and again with the aim of reducing exchange rate volatility.
An analysis of the determinants of private sector investment in Kenya using the autoregressive distributed lag (ARDL) approach
(2015) Kingori, Batistar M.
The study sought to analyze the determinants of private investment in Kenya. The problem of ambiguous results of existing studies, mainly stemming from inappropriate econometric methods, called for further study of methodology and empirical model building. Results from numerous studies that have employed autoregressive distributed lag (ARDL) approaches are more likely to be persuasive than their predecessors. Primary objectives of the study were investigation of determinants of private sector investment and determination of the causal relationship between private sector investment and real gross domestic product. Various specific economic indicators were the data type of interest since the study was purely of economic nature. The study used secondary data, sourced from World Bank and International Monetary Fund. An advanced econometric technique, the ARDL model, was employed in data analysis to help in addressing the objectives that the study sought to address. The study found that real Gross Domestic Product (GDP) and trade openness were the main determinants of private investment in the long run. However, in the short run, real GDP remained an important variable in explaining variations in private investment while openness was no longer important switching with inflation which was found to be important. There is a unidirectional causality effect where private investment granger causes real GDP and not vice versa recommending deeper understanding of factors that influence GDP in the long run and short run. Gross domestic product being a major determinant of private sector investment informs and guides policy makers in quest to providing stable macroeconomic conditions in the economy. Moreover, to ensure sustainable economic development it’s upon policy makers to ensure that local industries are protected since the results indicate an inverse relationship between private investment and trade openness which is a proxy to liberalization.
An analysis of the determinants of the banking crises in the Southern African Development Community (SADC)
(2014) Dembure, Honest
This study analysed the determinants of banking crises in the SADC region for the period 1985-2011. The probability of a banking crisis was estimated using a multinomial logit model on real GDP growth level, terms of trade, the ratio of private domestic credit to GDP and the ratio of M2 to foreign exchange reserves. The model was estimated for the pooled, non-systemic and systemic crises economies in order to determine if the impact of the determinants differs between systemic and non-systemic crises. This study found that the impact of the determinants differs between systemic and non-systemic crises as well as between one year prior to a crisis and the year when the crisis starts. Real GDP growth rate was found to be the leading indicator of banking crises one year prior to the start of a crisis for the pooled, non-systemic and systemic crises economies. The ratio of private domestic credit to GDP was found to be significant in explaining the start of a banking crisis in a pooled model. As the ratio of domestic credit to private sector to GDP increases by 1 unit, the likelihood of start of a banking crisis is 0.01 percent higher which is in line with theory and findings by other researchers. This finding remained robust for the systemic banking crises economies. However, none of these macro-economic and financial variables were found significant in explaining the start of a non-systemic crisis.
An analysis of the effectiveness of inflation targeting monetary policy framework in South Africa
(University of Namibia, 2015) Makuvaza, Leonard
The aim of this study was to investigate the effectiveness of inflation targeting in South Africa using the Vector Autoregressive method (VAR). The study used monthly data for the period 2000 to 2013 on the following variables: Consumer Price Index Inflation (CPI), money supply (M1), Repo Rate and the Nominal Exchange Rate (NER). The VAR methodology was used to investigate the response of inflation to monetary policy shocks under the inflation targeting framework. The findings from the study revealed that the response of inflation is not consistent with the Taylor rule hence increases in the repo rate meant to reduce inflation actually increase the inflationary pressures in the economy. This is due to the composition of the Consumer Price Index. Housing constitutes the largest weight on the CPI hence this has an impact on how the Repo rate affects inflation. Increases in the repo rate results in increase in the demand for rentals because prospective home owners tend to resort to renting because mortgage loans become expensive as a result of high interest rates. The increase in the demand for rentals pushes the rental price of houses. This results in higher inflation levels. Furthermore, the study established that the inflation targeting framework is effective in reducing inflation persistence because inflation approaches steady state with twelve months after exposure to structural shocks in the VAR system. The autoregression model of inflation showed that the sum of the coefficients is less than one (0.965) showing that inflation targeting has effectively reduced the persistence of inflation of South Africa.
An analysis of the effects of demographic and epidemiological transitions of health expenditure in Namibia
(University of Namibia, 2017) Hofni, Lavinia B.
Health expenditures have been on the rise in most countries including Namibia. Findings from studies that analyse the effects of demographic and epidemiological health outcomes on health expenditure can be used to determine if sufficient resources are being spent on health care, if they are appropriately allocated, and if not, how they could be re-allocated to achieve more value-for-money and bring about significant improvements in health outcomes. The study analysed effects of demographic and epidemiological health outcomes (infant mortality rate, life expectancy, HIV/AIDS and tuberculosis with the control variable GDP) on health expenditure in Namibia during the period 1990 to 2014. The results from the study indicate that total health expenditure (% of GDP) is integrated of order one, I(1) and cointegrated with all the other explanatory variables. Subsequently, cointegration analysis and VECM were employed to detect possible long run and short run relationships. The results from the study indicate that a long run relationship exists between the health outcomes and health expenditure. From the error correction model, only GDP was found to be significant to health expenditure. This finding is an indication that more needs to be done to improve health outcomes. Life expectancy, tuberculosis and GDP showed a positive relationship with health expenditure, whilst infant mortality and HIV were negative. Health outcomes such as HIV and infant mortality were insignificant, which is an indication that resources are not sufficiently spent on health outcomes that can be improved. Subsequently, policy recommendations from the study imply that certain strategies need to be put in place for appropriate allocation of resources and attention should be shifted to health outcomes that can be significantly improved with higher spending in order to allocate resources efficiently and cut costs.
An analysis of the effects of exchange rate volatility on exports in Namibia
(2009) Shipanga, Eden T.
Abstract provided by author
An analysis of the efficiency of commercial banks in Namibia
(University of Namibia, 2017) Nkabila, Daniel I.
This research analysed the level of efficiency of commercial banks operating in Namibia. The research targeted the big four banks: First National Bank, Bank Windhoek, Standard Bank and Nedbank; by market share in the economy. The research was carried out using data from the respective banks’ annual reports for the period 2011 to 2015. Analysis of the data was done through the Data Envelopment Analysis (DEA) method. The inputs and outputs used were defined through the intermediation approach. The findings show that over the period under investigation only two banks achieved optimal efficiency. The two banks getting optimal score does not necessarily mean there is perfect efficiency as this optimality is benchmarked in relation to the banks being analysed. Furthermore, the overall average efficiency in the banking sector with respect to the banks investigated was around 89.4%, indicating that room for improvement exists. The presence of an efficient banking system is a clear indication of a sound intermediation process and hence the banks contribute to economic growth as well as a conduct of effective monetary policy.
An analysis of the impact of external debt on economic growth: The case of Zimbabwe: 1980-2012
(University of Namibia, 2014) Mashingaidze, Moses
The thrust of this study was to analyse the impact of external debt on Zimbabwe’s economic growth using a Vector Autoregressive approach (VAR). The study used annual time series data covering the period 1980 to 2012 on the following variables: Economic growth (proxied as Real Gross Domestic Product), capital (proxied as Gross Fixed Capital Formation), labour force and external debt represented as LNY, LNK, LNLAB and LNEXT respectively. Results from the analysis confirm a long-run negative relationship between external debt and economic growth. The Toda-Yamamoto Granger causality tests revealed the existence of unidirectional causality running from external debt to economic growth. This result indicates that for Zimbabwe, external borrowing has had an influence on the country’s Gross Domestic Product (GDP). Thus, the results further confirm the presence of debt overhang in Zimbabwe. In this regard, effective debt management policies and strategies aimed at reducing the cost and risks associated with external debt are a must for ensuring a sustainable path of external debt to promote economic growth. There is need for government to put in place a public debt law to ratify any borrowings requirements. This will help in ensuring that all borrowings by government are targeted towards financing of projects that have a high return which would result in crowding in of private investments as well as ensuring fiscal sustainability. Expansion of the tax revenue base will help ease the budget deficit which compels huge borrowing by governments both externally and internally.