African Finance Journal - Volume 12, Issue 1, 2010
Volumes & issues
Volume 12, Issue 1, 2010
Possible effective financing models for entrepreneurship in South Africa : guides from microfinance and venture capital financeSource: African Finance Journal 12, pp 1 –26 (2010)More Less
This paper assesses current business financing models that are used in South Africa to aid and/or encourage entrepreneurship as a means of job creation and poverty alleviation. We start by examining how microfinance fares in this attempt. We then suggest possible ways of addressing microfinance shortfalls in aiding entrepreneurship and sustainable enterprise development, by drawing on appropriate features of venture capital/angel finance and other complementary financing innovations.
Source: African Finance Journal 12, pp 27 –52 (2010)More Less
This study investigates the impact of FDI on domestic private investment, specifically whether FDI has positive spill-over effects (crowding-in) or negative spill-over effects (crowding-out) on domestic private investment. The study uses a flexible accelerator investment model, which was modified specifically with regard to data availability to capture some of the institutional and structural characteristics of developing countries particularly the Sub-Saharan Africa (SSA) nations and also to include FDI as one of the explanatory variables. In addition to the standard panel models (i.e. fixed effects, between effects and random effects regressions), 2SLS econometric technique was used to account for the simultaneity bias between private investment and public investment, which would otherwise lead to inconsistency of parameter estimates. The Hausman (1978) specification test was then used to check for the preferable model.
The study uses data collected on 34 SSA countries over the period 1990-2003. Average values for the five sub-periods : 1990-92, 1993-95, 1996-98, 1999-2001 and 2002-03 were used in order to smooth out the effects of business cycles. The findings show that FDI crowds-out domestic private investment in the selected SSA sample. This finding seems to suggest that, although increased FDI leads to economic growth in SSA as documented by Mutenyo (2008), the effect of FDI on economic growth is derived from the overall higher induced level of investment rather than efficiency gains.
Author Hakeem MobolajiSource: African Finance Journal 12, pp 53 –71 (2010)More Less
This paper investigates the impact of a spatial variable on financial development in SSA for the period of 1970-2005. It is a dynamic panel data model that uses Arellano and Bond GMM estimation. The spatial variable is the financial development in South Africa interacted with the ratio of distance from the other SSA countries. The paper finds that financial development is geographically sensitive, and thus not immune to spatial externality. The study indicates that there is a spatial benefit (cost) associated with financial development (underdevelopment).To confirm the robustness of our findings, we conduct cointegration test to assess whether or not the spatial variable has any long-run impact on financial development in particular and on economic growth in general. In all, we find statistical evidence that financial development exhibits spatial externality among SSA countries.
Source: African Finance Journal 12, pp 72 –89 (2010)More Less
This paper analyses the causal relationship between financial development and economic growth in Botswana for the period 1977-2006, using Granger causality through co-integrated Vector Auto-regression methods and two proxies for financial development. Results show that there is a stable long-run relationship between financial development and economic growth regardless of which proxy for financial development is used. Further, results provide evidence of supply-leading and demand-leading views of finance-growth nexus; thus, suggesting that enhancement of both financial markets and real economy's activity would be an advisable development strategy for Botswana.