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- Volume 16, Issue 4, 2013
South African Journal of Economic and Management Sciences - Volume 16, Issue 4, 2013
Volumes & issues
Volume 16, Issue 4, 2013
Source: South African Journal of Economic and Management Sciences 16, pp 364 –382 (2013)More Less
The role of operational risk in the 2007/2008 financial crisis is explored. The factors that gave rise to the crisis are examined and it is found that although the event is largely regarded as a credit crisis, operational risk factors played a significant role in fuelling its duration and severity. It is concluded that, from an operational risk perspective, 2008 was the worst on record. Considering the extensive role of operational risk in global financial calamities, suggestions are made to improve the management of this risk type.
Empirical analysis of space and capital markets in South Africa : a review of the REEFM- and FDW modelsAuthor Douw G.B. BoshoffSource: South African Journal of Economic and Management Sciences 16, pp 383 –394 (2013)More Less
This paper assesses the different models, in conjunction with the different theories surrounding the distinction and interdependencies between space- and capital markets. First, the theory of space- and capital markets is discussed with reference to two models, the FDW and the REEFM models. The FDW model provides a diagrammatic explanation of the behaviour of the property market, while the REEFM is an econometric model based on statistical principles that are able to forecast property-market behaviour by interpreting specific given variables. The REEFM model as the perceived more sophisticated model, untested in South Africa, was then analysed to test its applicability in the South African context. The findings confirmed the applicability of the model, although one part is not confirmed and is suggested for further research.
Author Eben MareSource: South African Journal of Economic and Management Sciences 16, pp 395 –406 (2013)More Less
This paper presents a method for interpolating yield curve data in a manner that ensures positive and continuous forward curves. As shown by Hagan and West (2006), traditional interpolation methods suffer from problems: they posit unreasonable expectations, or are not necessarily arbitrage-free. The method presented in this paper, which we refer to as the "monotone preserving r(t)r method", stems from the work done in the field of shape preserving cubic Hermite interpolation, by authors such as Akima (1970), de Boor and Swartz (1977), and Fritsch and Carlson (1980). In particular, the monotone preserving r(t)r method applies shape preserving cubic Hermite interpolation to the log capitalisation function. We present some examples of South African swap and bond curves obtained under the monotone r(t)r preserving method.
Author Micheline Juliana NaudeSource: South African Journal of Economic and Management Sciences 16, pp 407 –417 (2013)More Less
The South African automotive industry makes an important contribution to the South African economy. However, there are deficiencies within the local automotive component manufacturers' (ACMs) supplier base and therefore automotive assemblers, or original equipment manufacturers (OEMs), have to import many of their parts requirements. These deficiencies are caused by ACMs' lack of technology, global supply capability, cost competitiveness and their geographic location (ACMs are scattered across the country). A study was conducted to explore the supply chain challenges South African ACMs face and whether the location, size and age of participating ACMs have a bearing on whether they face the same challenges. The results revealed that the most significant supply chain challenges in South Africa were in the customer relationship category. From the hypotheses testing, the conclusion could be drawn that, in general, participating ACMs face common supply chain challenges, irrespective of their location, age and size. This article contributes to the published research on the topic and the findings reveal that business opportunities in the automotive industry exist for entrepreneurs aspiring to enter into the automotive component industry.
Measuring spill-over effects of foreign markets on the JSE before, during and after international financial crisesSource: South African Journal of Economic and Management Sciences 16, pp 418 –434 (2013)More Less
There is a large body of research that proves the co-movement of international stock markets over time. This co-movement manifests through various instruments ranging from stocks and bonds, to soft commodities and can be visualised as returns and volatility spill-over effects. During the most recent financial crisis, it was once again highlighted that no market is immune to spill-over effects from other international markets. By employing an aggregate-shock (AS) model, returns and volatility spill-over effects of the Hang Seng, London, Paris, Frankfurt and New York stock markets to the JSE are confirmed. The findings also confirm the JSE All share index is directly affected through contagion by the returns of the economic area where the crisis originates. However, the results further confirm that South Africa has progressed in shielding its stock market against financial crises in recent times. These findings hold important implications for stock portfolio managers in South Africa.
Content analysis of published articles in the South African Journal of Economic and Management SciencesSource: South African Journal of Economic and Management Sciences 16, pp 435 –451 (2013)More Less
The publication of academic research is important for its contribution to the body of knowledge. A periodic analysis of journal content leads to the identification of research practices; while it also identifies the challenges that researchers face. The South African Journal of Economic and Management Sciences (SAJEMS) is considered to be one of the leading publications in the field of economic and managerial research in South Africa. The SAJEMS was selected as the unit of analysis; and a content analysis was conducted on 257 articles published during the seven-year period 2004 - 2010. The main purpose of this study was to investigate the input and output factors relating to published articles, including questions on authors and article content, such as the various methodological approaches. The findings revealed that there has been a decrease in co-authored articles during the period 2005 - 2008. Although the contribution by practitioners increased significantly in 2005 and 2008, the majority of the articles are still authored predominantly by academics. It is promising to see that international authors were involved in nearly 20 per cent of the articles contributed. When it came to the methodological approaches, the articles employed largely non-probability sampling designs. Furthermore, almost two-thirds of the articles published in SAJEMS were based on quantitative research designs. This content analysis reveals the current research practices published in the SAJEMS. It provides food for thought for academics.
Where the two logics of institutional theory and entrepreneurship merge : are family businesses caught in the past or stuck in the future?Source: South African Journal of Economic and Management Sciences 16, pp 452 –467 (2013)More Less
The aim of this article is to investigate how owners of family businesses combine their traditional heritage with changes in a new competitive arena. This is done by allowing the owners and managers of six vineyards to give voice to their concerns about the past, present, and future. The findings suggest that family businesses in the South African wine industry are subject to a process of institutionalisation in which entrepreneurial activities, which are part of this process, may not be as entrepreneurial as they appear at first. It is found that the two forms of logic behind the institutionalisation of the family firm and entrepreneurial activities in the context of the post-apartheid era can be successfully merged. Theoretical and practical implications bring the article to a close.
Source: South African Journal of Economic and Management Sciences 16, pp 468 –485 (2013)More Less
Orientation : Business rescue has become a critical part of business strategy decision making, especially during economic downturns and recessions. Past legislation has generally supported creditor-friendly regimes, and its mind-set still applies, which increases the difficulty of such turnarounds. There are many questions and critical issues faced by those involved in rescue. Despite extensive theory in the literature on failure, there is a void regarding practical verifiers of the signs and causes of venture decline, as specialists are not forthcoming about what they regard as their 'intellectual property'.
Research purpose : This article introduces the concept and role of 'verifier determinants' of early warning signs, as a tool to confirm the causes of decline in order to direct rescue strategies and, most importantly, reduce time between the first observation and the implementation of the rescue.
Motivation for the study : Knowing how specialists confirm causes of business decline in practice could assist in analysis and deciding on strategies for the rescue earlier than can be done using traditional due diligence, which is time consuming. Reducing time is a crucial element of a successful rescue.
Research design and approach : The researchers interviewed specialists with extensive experience in credit for rescue and turnaround. An experimental design was used to ensure the specialists evaluated the same real cases to extract their experiences and base their decisions on.
Main findings : The specialists confirmed the use of verifier determinants and identified such determinants as they personally used them to confirm causes of decline. These verifier determinants were classified into five categories namely, management, finance, strategic, banking and operations and marketing of the ventures under investigation. The verifier determinants and their use often depend heavily on subconscious (non-factual) information based on previous experiences, rendering them 'irrational' in modern management perspectives.
Practical/managerial implications : Decision makers and affected persons could benefit from the insights obtained through this study. Confirming early warning signs through verifier determinants would be beneficial for entrepreneurs who are creditors, company directors, rescue practitioners, government regulators, court officials and educators alike.
Contribution/value add : Knowing the verifier determinants could assist decision making and improve the effectiveness of rescue strategies. Business rescue practitioners can improve their 'investigation of the affairs' activity by using such verifier determinants.