Search results

The purpose of this paper is to investigate the dynamic link between financial inclusion and financial sector development (FSD) in Sub-Saharan Africa.

This paper employs a panel vector autoregressive framework to examine the dynamic link between financial inclusion and FSD in Sub-Saharan Africa.

The findings indicate that there is a reverse causality between FSD and financial inclusion in both the Sub-Saharan Africa countries sample and the full sample. It is evident that financial inclusion is a driver of FSD and vice versa.

The practical implication of this study is that financial inclusion should not only be pursued as a policy objective but it could also be an outcome variable of FSD and vice versa. This implies that African economies and governments in their effort to enhance financial inclusion, FSD can serve as a policy tool. This means that policies aimed at promoting financial inclusion will not impede FSD because the two are complementary. This suggests that we can achieve financial inclusion without sacrificing FSD and vice versa.

This paper provides first empirical evidence of the link between financial inclusion and FSD from the Sub-Saharan Africa perspective using data sourced from World Development Indicators spanning from 1990 to 2014 for 48 Sub-Saharan African economies and 217 economies in the world for the full sample.

This study seeks to: (1) examine the extent of interconnectedness prevailing between the cryptocurrency market, the stock market and the precious metals market. (2) Conduct thorough assessment of hedge and safe-haven qualities of broad range of precious metals and cryptocurrencies against returns on the African stock market.

This study applied two novel approaches that is Cross-quantilogram, an advanced statistical technique used to examine the relationship between quantiles of response variable and the quantiles of predictor variables, and TVP-VAR, a technique that captures the dynamic connectedness of variables under consideration.

It was found that the three markets are highly interconnected, particularly among assets under the respective financial markets. It was further revealed that the Johannesburg Stock Exchange (JSE) was the most resilient stock market, whereas Bitcoin, BNB, Silver (XAG) and Platinum (XPT) also exhibited notable resistance to shocks. Finally, the study found that cryptocurrencies and precious metals portrayed varying hedge and safe haven qualities under the various stock markets.

The high interdependency between the African stock market, cryptocurrencies and precious metals suggests that none of the markets is immune to shocks form the other market. The finding that cryptocurrencies and precious metals exhibit some degree of safe-haven and hedge potentials, albeit limited in certain stock markets, provides investors with alternative investment options during market downturns. Since most African stock markets, except the JSE, are net receivers of shocks, investors in these markets should exercise caution during periods of global financial uncertainty.

To the best of our knowledge, this study is the first to explore the dynamic interconnectedness between seven carefully selected African stock markets, three distinct cryptocurrencies and four precious metals, while also assessing the hedge and safe-haven potential of the cryptocurrencies and precious metals against stock market returns. Additionally, the study stands out in recent literature by employing two novel approaches: the TVP-VAR model, which captures the dynamic connectedness among variables, and the Cross-Quantilogram, an advanced statistical method that analyzes the relationship between the quantiles of the response and predictor variables, all within a single study.

This study seeks to examine the relationship between macroeconomic shock indicators, namely geopolitical risk (GPR), global economic policy uncertainty (GEPU) and financial stress (FS), and returns as well as volatilities on seven carefully selected stock markets in Africa. Specifically, the study intends to unravel the co-movement and interdependence between the respective macroeconomic shock indicators and each of the stock markets under consideration across time and frequency.

This study employed wavelet coherence approach to examine the strength and stability of the relationships across different time scales and frequency components, thereby providing valuable insights into specific periods and frequency ranges where the relationships are particularly pronounced.

The study found that GEPU, Financial Stress (FS) and GPR failed to induce significant influence on African stock market returns in the short term (0–4 months band), but tend to intensify in the long-term band (after 6th month). On the contrary, stock market volatilities exhibited strong coherence and interdependence with GEPU, FSI and GPR in the short-term band.

This study happens to be the first of its kind to comprehensively consider how the aforementioned macro-economic shock indicators impact stock markets returns and volatilities over time and frequency. Further, none of the earlier studies has attempted to examine the relationship between macro-economic shocks, stock returns and volatilities in different crisis periods. This study is the first of its kind in to employ data spanning from May 2007 to April 2023, thereby covering notable crisis periods such as global financial crisis (GFC) and the COVID-19 pandemic episodes.