Namibia Business School (NBS)

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Browsing Namibia Business School (NBS) by Subject "Bank of Namibia"

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    Investigating the determinants of sovereign bond yield spread in Namibia
    (University of Namibia, 2021) Sindongo, Valentinus M.
    The study investigates the determinants of sovereign bond yield spread in Namibia for the period 2011 to 2019. Secondary quarterly time series data for the period 2011-2019 was used to investigate the determinants of government bond spread over the last decade. The variables used were ten-year government bond yield, GDP growth rate, government debt, current account balance and inflation rate. Data on all variables was obtained from the Bank of Namibia, except for the GDP growth rate which was obtained from the Namibia Statistics Agency. The tests employed included the unit root tests and the Autoregressive Distributed lag (ARDL) bound test. The study further performed diagnostic tests such asnormality test, serial correlation, heteroscedasticity, Ramsey test, CUSUM and CUSUMSQ to test for the goodness of fit of the model. The results from the unit root testswith the use of the Augmented Dickey-Fuller test indicate that all variables were stationary at first difference except for the current account balance which was stationary at other levels. The bounds test to cointegration revealed that there is joint significanceamong variables, implying a long-run relationship. The ARDL model estimation results reveal that GDP growth rate and inflation rate have a positive and statistically significant effect on the sovereign bond yield spreads in the long run while in the short run GDP growth rate has a negative sign and inflation rate has a positive sign and both are statistically significant. The study also revealed also that government debt and current account balance have coefficients that are positive and negative, respectively. However,in both the short and long run, these variables are statistically insignificant, meaning they don’t affect the sovereign bond yield spread. The findings also indicate the coefficient of determination of 87.7 per cent, meaning that there is a strong relationship and that the independent variables influence 87.7 per cent of the government bonds yield spread. Finally, the results of the diagnostic test confirm the long-run relationships between the variables and the stability of the coefficients
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    The nexus between financial innovations and velocity of money: Evidence from Namibia
    (University of Namibia, 2022) Uugulu, Tomas Mekondjo
    The study of the velocity for money in an economy is a central issue in central bank policy formulation. This is so because a steady demand for money function is vital for the conduct of effective monetary policy. The study investigated the relationship between financial innovations and the velocity of money in the Namibian economy. Secondary data from the World Bank and Bank of Namibia, covering the period 2000 to 2020. The study relied on the Autoregressive Distributed Lag Model technique to test the relationship. The founding objectives were named to explore whether financial innovation explained the velocity of money and secondly whether there existed a short run or a long-run relationship between the selected variables. The results indicate that financial innovations explain the velocity of money in the economy, and the Error Correction model determined that there was an existent long-run relationship between the variables. The margin of the inverse relationship was evident from the coefficient of - 1.107354, meaning that an increase by one unit change in financial innovation caused a -1.107354 decrease in the velocity of money in the economy. Hence, the study found that both in the short-run and long-run financial sector innovations are inseparably linked with the velocity of money. The model also included two control variables GDP and the opportunity cost of holding money as the theoretical foundation nominate the two variables to also affect money demand which eventually affects velocity of money. The results found that a positive relationship existed between the GDP variable and velocity of money and the magnitude effect of the relationship is shown by the coefficient. The other variable opportunity cost of holding money was found to be statistically insignificant as showed the probability and the t-statistic. From these results, a cautionary advice would be extended to the policymakers to manage this dynamic relationships better as it has a bearing on the monetary policy framework in the case of the velocity of money (money demand function) in an economy