scholarly journals Budget deficit and long-term interest rates in South Africa

2012 ◽  
Vol 6 (11) ◽  
Author(s):  
Lumengo Bonga-Bonga
Keyword(s):  
South Africa ◽  
Interest Rates ◽  
Budget Deficit

Greenspan's Conundrum and Bernanke's Nightmare

2017 ◽  
pp. 1-23
Author(s):  
Francis E. Warnock
Keyword(s):  
Financial Markets ◽  
Interest Rates ◽  
International Finance ◽  
Budget Deficit ◽  
Global Financial Crisis ◽  
Major Step ◽  
Treasury Bonds ◽  
The Global Financial Crisis ◽  
The U.S

At what point in the tepid recovery from the global financial crisis should the Fed take a major step in normalizing U.S. monetary policy by greatly reducing its holdings of U.S. Treasury bonds? Federal Reserve Board Chairman Ben Bernanke faced this question in Spring 2012, even as he was concerned that the U.S. economy was on weaker footing than many believed. Suitable for both core and elective MBA courses in global financial markets and international finance, this case examines the risks associated with a policy some would consider monetizing the budget deficit. Students consider the factors behind the current and prospective levels of U.S. long-term interest rates from Bernanke's perspective.

scholarly journals An analysis of the statistical relationship between precious metals prices and other monetary policy variables and inflation in South Africa

2012 ◽  
Vol 9 (2) ◽  
pp. 420-437
Author(s):  
Raphael Tabani Mpofu
Keyword(s):  
South Africa ◽  
Monetary Policy ◽  
Exchange Rates ◽  
Interest Rates ◽  
Precious Metals ◽  
Oil Prices ◽  
Statistical Relationship ◽  
Portfolio Strategies ◽  
Statistical Relationships

This study looked at the statistical relationship between precious metals prices, oil prices, money supply, interest rates and exchange ratesandinflation. It particularly looked at how inflation was influenced by these variables over time. The findings in this study were consistent with the hypothesis that the values of these variables influence inflation in the short-term and long-term. One of the findingsthat could be of interest especially for South Africa indicates that precious metalsprice changes, especially gold,could act as signals of pending changes to inflation and are also statistically related to interest rate movements. However, it was also found that the relationship between exchange rates movements during the financial crisis era between 2008 and 2010 did affect the other variables like prime, precious metals prices and oil prices which led to significant spikes in inflation. It should be emphasized that these finding of a statistical relationship is only consistent with observed data pertaining to South Africa and not proof of such behaviour prevailing in other markets. Even then, such a conclusion would require the isolation of a number of country specific behaviours and factors that may be correlated with precious metals prices, oil prices, exchange rates and interest rates and that may simultaneously affect inflation, which this study did not factor in. However, knowledge of statistical relationships can help in informing monetary policy responses and designing appropriate portfolio strategies although these findings do not provide unambiguous proof of any underlying behavioural hypothesis.

scholarly journals A stochastic investment model for actuarial use in South Africa

2021 ◽  
Vol 20 (1) ◽  
pp. 49-79
Author(s):  
Y.Ş. Şahin ◽  
S Levitan
Keyword(s):  
South Africa ◽  
Interest Rates ◽  
Investment Model ◽  
Insurance Companies ◽  
Short Term ◽  
Price Inflation ◽  
Share Prices ◽  
Inflation Rates ◽  
Investment Models

In this paper, we propose a stochastic investment model for actuarial use in South Africa by modelling price inflation rates, share dividends, long-term and short-term interest rates for the period 1960–2018 and inflation-linked bonds for the period 2000–2018. Possible bi-directional relations between the economic series have been considered, the parameters and their confidence intervals have been estimated recursively to examine their stability, and the model validation has been tested. The model is designed to provide long-term forecasts that should find application in long-term modelling for institutions such as pension funds and life insurance companies in South Africa Keywords: Stochastic investment models; price inflation; share dividend yields; share dividends; share prices; long-term interest rates; short-term interest rates; inflation-linked bonds; South Africa

scholarly journals The Case of Construction Industr An Evaluation of the Lending Model of Commercial Banks in South Africa: The Case of Construction Industry

2020 ◽  
Vol 7 (3) ◽  
pp. 403-415
Author(s):  
Lindy Yolande Mtsweni ◽  
Philip Serumaga-Zake ◽  
Jan Kruger
Keyword(s):  
South Africa ◽  
Interest Rates ◽  
Construction Industry ◽  
Small Businesses ◽  
Commercial Banks ◽  
Qualitative Data ◽  
Lending Policy ◽  
Multiple Case

The purpose of this study was to evaluate the commercial banks’ lending model for small businesses in South Africa. The multiple case study design and purposive sampling were used to select six small businesses from a bank’s database for the study. The qualitative data was categorised and analysed thematically. It was found that the lending criteria are based on the bank and client’s long-term relationship, client’s background, character, collateral, capital, capacity and affordability, that the lending model is helping to grow small businesses in the country. The commercial banks’ lending policy should allow flexibility, among others, in terms of the minimum deposits and interest rates charged.  

scholarly journals Monetary Policy And Long-Term Interest Rates In South Africa

2010 ◽  
Vol 9 (10) ◽  
Author(s):  
Lumengo Bonga-Bonga
Keyword(s):  
South Africa ◽  
Monetary Policy ◽  
Interest Rates ◽  
Impulse Response Functions ◽  
Monetary Policy Shocks ◽  
Vector Autoregressive ◽  
Supply Shock ◽  
Policy Shocks ◽  
Structural Vector Autoregressive Model

This paper examines how short-term and long-term interest rates react to supply, demand and monetary policy shocks in South Africa. Use is made of the impulse response functions obtained from the structural vector autoregressive model with long-term restrictions. We find a positive correlation between the two interest rates after a monetary and demand shock and a negative correlation after a supply shock. The finding of this paper is that the operation of the monetary transmission mechanism should be effective in South Africa. Furthermore, this paper provides an approach to identify supply shocks in the South African business cycle.

scholarly journals Determinants Of Long-Term Interest Rates In The United States

2012 ◽  
Vol 10 (5) ◽  
pp. 257
Author(s):  
Charles Kweku Konadu-Adjei ◽  
Roger W. Mayer ◽  
Wen-Wen Chien
Keyword(s):  
United States ◽  
Interest Rates ◽  
Budget Deficit ◽  
Time Series Data ◽  
The United States ◽  
Capital Inflow ◽  
Series Data ◽  
Defined Benefit ◽  
Private And Public

The behavior of the long-term interest rates is a practical problem for private and public organizations. Organizations need to estimate interest rates for purposes of assigning value to long-term obligations such as defined benefit plans and long-term leases and making decisions related to long term capital purchases. The purpose of this study was to analyze the determinants of long-term interest rates in the United States, using 352 quarterly time series data points extending from 1999 to 2009. This study examines how a change in overnight interest rates, budget deficit, Gross Domestic Product (GDP), inflation, and net capital inflow impact on long-term interest rates, which is the 30-year U.S. Treasury constant securities rate. We find that the variables (overnight interest rates, expected inflation, budget deficit, foreign capital inflow, and GDP) have statistically significant impact on long-term interest rates in the United States; all variables jointly explain changes in the long-term interest rates. The findings of this study can assist organization as they assign values to long-term obligations and assets.

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