African Review of Economics and Finance, Dec 1, 2014
Improving human welfare has long been considered a goal worth pursuing. Consequently, policy make... more Improving human welfare has long been considered a goal worth pursuing. Consequently, policy makers and practitioners have devoted an enormous amount of time and resources to promoting high standards of living. Over the past century or so, economics has established itself as the dominant paradigm of inquiry into the quantitative and qualitative changes in the areas of health and educational attainments, human capital development, resource distribution and environmental sustainability, among other societal objectives. Like many other actions in life, however, economic choices do not take place in a vacuum, and these choices entail costs. The sciences of morality, individual responsibility and character, institutions and culture, are important in shaping development policy by balancing the various choices with their costs. The philosophical and ethical foundations that underpin development policy are, thus, as important as the process of economic development itself. Balancing these is, however, challenging, and often leads to more problems than solutions. Such dilemmas continue to characterise debates in development studies and practice, and provide a strong case for a holistic approach to development policy that transcends mainstream economics to incorporate insights and values from fields as diverse as psychology, evolutionary biology, geography and political science, to mention a few. These dilemmas are at the heart of the book under review: Development dilemmas: The methods and political ethics of growth policy.
African Review of Economics and Finance, Dec 22, 2015
Since inflation targeting (IT) began about a quarter of a century ago, a number of industrialised... more Since inflation targeting (IT) began about a quarter of a century ago, a number of industrialised and an increasing number of emerging and developing countries have adopted it as a framework for conducting monetary policy. Empirical evidence from developed economies suggests that the framework has been associated with low and stable inflation, and a reduction in inflation volatility. The evidence for African countries and other developing regions is not conclusive. Zambia is contemplating a policy of targeting inflation. This article assesses the readiness of Zambia for IT. We find that a number of preconditions for successful adoption are not fulfilled. Thus, while the idea itself has much merit, IT in an unprepared environment may produce perverse incentives, and complicate both fiscal and monetary policy. It is thus imperative that policy makers in Zambia and elsewhere in the developing world address the preconditions highlighted in this article, before adopting a fully-fledged IT policy.
Trends of women accessing senior manager roles in corporate South Africa have made considerable g... more Trends of women accessing senior manager roles in corporate South Africa have made considerable gains, and although some women have managed to crack the glass ceiling which has hindered their full participation in economic life, true gender equality is yet to be achieved. Sometimes, what seems like a wonderful opportunity to climb up the corporate ladder is an ascent that leads you to the top and pushes you over the edge. But what happens when women do manage to get to the top? The study investigates the concept of the glass cliff by interrogating its existence and looking further into the implications of the phenomenon. A qualitative research methodology was employed, and data collected through semi-structured interviews from a total of 15 participants. The research suggests that for women managers it is important to understand when, why, and how glass cliff appointments are likely to occur and elaborates on strategies for eliminating the glass cliff. The study goes further to make suggestions to policy makers about the importance of understanding the impact of the choices made by women seeking management positions and provides insights regarding how women feel about taking these precarious manager roles. This chapter aims at contributing to this under-researched area from a South African perspective.
African Journal of Economic and Management Studies, Jun 12, 2017
Purpose The purpose of this paper is to examine the impact of sovereign credit ratings on corpora... more Purpose The purpose of this paper is to examine the impact of sovereign credit ratings on corporations in South Africa by assessing whether the sovereign rating assigned to South Africa by credit rating agencies acts as a ceiling/constraint for credit ratings assigned to corporations that operate within the country. The question of whether sovereign ratings are significant in determining corporate ratings was also explored. Design/methodology/approach To test the hypothesis regarding the rating of corporates relative to sovereigns, a longitudinal panel design was followed. The analysis employed fixed effects and generalized method of moments techniques. Findings The main findings are that sovereign ratings both act as a ceiling for corporate ratings and are important determinants of corporate ratings in South Africa. The findings however indicated that company specific variables (accounting variables) are not significant in explaining credit risk ratings assigned to corporates. Research limitations/implications This study only looked at the rating activity done by Standard and Poor’s (S&P). A possible further study could explore the hypothesis tested in this research using data from multiple rating agencies and contrast the results across different agencies. Future studies could also look at crisis periods and how the transfer risk discussed in this paper manifests during the transfer period. Practical implications The results have implications for the borrowing costs incurred by corporates in South Africa when participating in the international debt market. The implication is that if the sovereign is poorly rated, the corporates may be limited in their ability to secure investor funding at competitive rates from the international financial markets. Thus, should South Africa be downgraded to non-investment grade by S&P, the implications may be that South African corporates on average may suffer the same fate. Originality/value Extant literature predominantly utilizes foreign currency ratings. To the extent that this study uses local currency ratings, it adds a new dimension in the body of related studies.
The bear markets associated with the ongoing COVID-19 crisis present a test case to examine the t... more The bear markets associated with the ongoing COVID-19 crisis present a test case to examine the traditionally expounded safe haven capabilities of gold and other precious metals, as well as the growing claims that bitcoin is the new "virtual gold" of our time. New evidence from our paper fails to corroborate such claims, however, we find bitcoin as a complementary safe haven asset. Further results show that none of the traditional safe havens and bitcoin could offer refuge for Africa's emerging equity markets. Instead, gold and palladium outperform the other candidates to provide sanctuary for small-sized equity markets.
The underpricing of initial public offerings (IPOs) represents one of the anomalies observed in p... more The underpricing of initial public offerings (IPOs) represents one of the anomalies observed in primary markets worldwide, however, the depth and breadth of it varies from country to country, and sector to sector. This study is an empirical analysis of short run performance of IPOs in the Johannesburg Stock Exchange (JSE). Using data for 138 South African IPOs that were listed on the JSE from 2006 to 2010, we found significant short run underpricing. A sector wise analysis of three broad sectors indicated that the financial sector had the largest IPO underpricing, particularly evident in 2007. The year-wise analysis is also documented.
The views expressed are those of the author(s) and do not necessarily represent those of the fund... more The views expressed are those of the author(s) and do not necessarily represent those of the funder, ERSA or the author's affiliated institution(s). ERSA shall not be liable to any person for inaccurate information or opinions contained herein.
Typescript prepared by Lisa Winkler at UNU-WIDER. UNU-WIDER gratefully acknowledges the financial... more Typescript prepared by Lisa Winkler at UNU-WIDER. UNU-WIDER gratefully acknowledges the financial contributions to the research programme from the governments of Denmark, Finland, Sweden, and the United Kingdom. The World Institute for Development Economics Research (WIDER) was established by the United Nations University (UNU) as its first research and training centre and started work in Helsinki, Finland in 1985. The Institute undertakes applied research and policy analysis on structural changes affecting the developing and transitional economies, provides a forum for the advocacy of policies leading to robust, equitable, and environmentally sustainable growth, and promotes capacity strengthening and training in the field of economic and social policy-making. Work is carried out by staff researchers and visiting scholars in Helsinki and through networks of collaborating scholars and institutions around the world.
Journal of sustainable finance & investment, Dec 25, 2019
A large body of literature has emphasized the importance of financial development (FD) for econom... more A large body of literature has emphasized the importance of financial development (FD) for economic growth and exporting. 1 Nonetheless, recent empirical findings have shown that FD does not affect the growth of low-income countries. 2 These findings raise questions about how FD affects exporting, and whether FD benefits all exporting countries equally. These aforementioned questions motivate us to explore the effects of FD on two essential components of exporting: export prices and export quality. 3 We find that these effects are highly asymmetric across countries, and we provide an explanation for these asymmetries. Additionally, our findings suggest that improving the quality of financial institutions alone is unlikely to boost quality or lower export prices in low-income countries. Theoretically, we provide a unifying framework to explain why and how the effects of FD on export quality and prices differ across countries. A key component of our model is based on the
Economic Papers: A Journal of Applied Economics and Policy, Nov 22, 2020
This paper investigates asymmetry and local leverage behaviour in individual and aggregate market... more This paper investigates asymmetry and local leverage behaviour in individual and aggregate markets of leading cryptocurrencies, and compares such characteristics to diverse traditional emerging asset classes. Generally different from the cryptocurrencies, the results show diffuse evidence of asymmetry and a significant presence of local leverage in the emerging markets. New findings indicate that mega‐size cryptocurrencies like Bitcoin and Ripple exhibit return‐volatility behaviour whereby volatility changes in their markets increase rather by a response to positive shocks than by a response to negative shocks. Akin to safe net assets, particularly gold, the inverse asymmetric reactions of the cryptocurrency markets position them distinctively from the existing emerging markets, suggestive that the digital assets stand to offer potentials beyond being diversifiers.
African Review of Economics and Finance, Dec 1, 2014
Improving human welfare has long been considered a goal worth pursuing. Consequently, policy make... more Improving human welfare has long been considered a goal worth pursuing. Consequently, policy makers and practitioners have devoted an enormous amount of time and resources to promoting high standards of living. Over the past century or so, economics has established itself as the dominant paradigm of inquiry into the quantitative and qualitative changes in the areas of health and educational attainments, human capital development, resource distribution and environmental sustainability, among other societal objectives. Like many other actions in life, however, economic choices do not take place in a vacuum, and these choices entail costs. The sciences of morality, individual responsibility and character, institutions and culture, are important in shaping development policy by balancing the various choices with their costs. The philosophical and ethical foundations that underpin development policy are, thus, as important as the process of economic development itself. Balancing these is, however, challenging, and often leads to more problems than solutions. Such dilemmas continue to characterise debates in development studies and practice, and provide a strong case for a holistic approach to development policy that transcends mainstream economics to incorporate insights and values from fields as diverse as psychology, evolutionary biology, geography and political science, to mention a few. These dilemmas are at the heart of the book under review: Development dilemmas: The methods and political ethics of growth policy.
African Review of Economics and Finance, Dec 22, 2015
Since inflation targeting (IT) began about a quarter of a century ago, a number of industrialised... more Since inflation targeting (IT) began about a quarter of a century ago, a number of industrialised and an increasing number of emerging and developing countries have adopted it as a framework for conducting monetary policy. Empirical evidence from developed economies suggests that the framework has been associated with low and stable inflation, and a reduction in inflation volatility. The evidence for African countries and other developing regions is not conclusive. Zambia is contemplating a policy of targeting inflation. This article assesses the readiness of Zambia for IT. We find that a number of preconditions for successful adoption are not fulfilled. Thus, while the idea itself has much merit, IT in an unprepared environment may produce perverse incentives, and complicate both fiscal and monetary policy. It is thus imperative that policy makers in Zambia and elsewhere in the developing world address the preconditions highlighted in this article, before adopting a fully-fledged IT policy.
Trends of women accessing senior manager roles in corporate South Africa have made considerable g... more Trends of women accessing senior manager roles in corporate South Africa have made considerable gains, and although some women have managed to crack the glass ceiling which has hindered their full participation in economic life, true gender equality is yet to be achieved. Sometimes, what seems like a wonderful opportunity to climb up the corporate ladder is an ascent that leads you to the top and pushes you over the edge. But what happens when women do manage to get to the top? The study investigates the concept of the glass cliff by interrogating its existence and looking further into the implications of the phenomenon. A qualitative research methodology was employed, and data collected through semi-structured interviews from a total of 15 participants. The research suggests that for women managers it is important to understand when, why, and how glass cliff appointments are likely to occur and elaborates on strategies for eliminating the glass cliff. The study goes further to make suggestions to policy makers about the importance of understanding the impact of the choices made by women seeking management positions and provides insights regarding how women feel about taking these precarious manager roles. This chapter aims at contributing to this under-researched area from a South African perspective.
African Journal of Economic and Management Studies, Jun 12, 2017
Purpose The purpose of this paper is to examine the impact of sovereign credit ratings on corpora... more Purpose The purpose of this paper is to examine the impact of sovereign credit ratings on corporations in South Africa by assessing whether the sovereign rating assigned to South Africa by credit rating agencies acts as a ceiling/constraint for credit ratings assigned to corporations that operate within the country. The question of whether sovereign ratings are significant in determining corporate ratings was also explored. Design/methodology/approach To test the hypothesis regarding the rating of corporates relative to sovereigns, a longitudinal panel design was followed. The analysis employed fixed effects and generalized method of moments techniques. Findings The main findings are that sovereign ratings both act as a ceiling for corporate ratings and are important determinants of corporate ratings in South Africa. The findings however indicated that company specific variables (accounting variables) are not significant in explaining credit risk ratings assigned to corporates. Research limitations/implications This study only looked at the rating activity done by Standard and Poor’s (S&P). A possible further study could explore the hypothesis tested in this research using data from multiple rating agencies and contrast the results across different agencies. Future studies could also look at crisis periods and how the transfer risk discussed in this paper manifests during the transfer period. Practical implications The results have implications for the borrowing costs incurred by corporates in South Africa when participating in the international debt market. The implication is that if the sovereign is poorly rated, the corporates may be limited in their ability to secure investor funding at competitive rates from the international financial markets. Thus, should South Africa be downgraded to non-investment grade by S&P, the implications may be that South African corporates on average may suffer the same fate. Originality/value Extant literature predominantly utilizes foreign currency ratings. To the extent that this study uses local currency ratings, it adds a new dimension in the body of related studies.
The bear markets associated with the ongoing COVID-19 crisis present a test case to examine the t... more The bear markets associated with the ongoing COVID-19 crisis present a test case to examine the traditionally expounded safe haven capabilities of gold and other precious metals, as well as the growing claims that bitcoin is the new "virtual gold" of our time. New evidence from our paper fails to corroborate such claims, however, we find bitcoin as a complementary safe haven asset. Further results show that none of the traditional safe havens and bitcoin could offer refuge for Africa's emerging equity markets. Instead, gold and palladium outperform the other candidates to provide sanctuary for small-sized equity markets.
The underpricing of initial public offerings (IPOs) represents one of the anomalies observed in p... more The underpricing of initial public offerings (IPOs) represents one of the anomalies observed in primary markets worldwide, however, the depth and breadth of it varies from country to country, and sector to sector. This study is an empirical analysis of short run performance of IPOs in the Johannesburg Stock Exchange (JSE). Using data for 138 South African IPOs that were listed on the JSE from 2006 to 2010, we found significant short run underpricing. A sector wise analysis of three broad sectors indicated that the financial sector had the largest IPO underpricing, particularly evident in 2007. The year-wise analysis is also documented.
The views expressed are those of the author(s) and do not necessarily represent those of the fund... more The views expressed are those of the author(s) and do not necessarily represent those of the funder, ERSA or the author's affiliated institution(s). ERSA shall not be liable to any person for inaccurate information or opinions contained herein.
Typescript prepared by Lisa Winkler at UNU-WIDER. UNU-WIDER gratefully acknowledges the financial... more Typescript prepared by Lisa Winkler at UNU-WIDER. UNU-WIDER gratefully acknowledges the financial contributions to the research programme from the governments of Denmark, Finland, Sweden, and the United Kingdom. The World Institute for Development Economics Research (WIDER) was established by the United Nations University (UNU) as its first research and training centre and started work in Helsinki, Finland in 1985. The Institute undertakes applied research and policy analysis on structural changes affecting the developing and transitional economies, provides a forum for the advocacy of policies leading to robust, equitable, and environmentally sustainable growth, and promotes capacity strengthening and training in the field of economic and social policy-making. Work is carried out by staff researchers and visiting scholars in Helsinki and through networks of collaborating scholars and institutions around the world.
Journal of sustainable finance & investment, Dec 25, 2019
A large body of literature has emphasized the importance of financial development (FD) for econom... more A large body of literature has emphasized the importance of financial development (FD) for economic growth and exporting. 1 Nonetheless, recent empirical findings have shown that FD does not affect the growth of low-income countries. 2 These findings raise questions about how FD affects exporting, and whether FD benefits all exporting countries equally. These aforementioned questions motivate us to explore the effects of FD on two essential components of exporting: export prices and export quality. 3 We find that these effects are highly asymmetric across countries, and we provide an explanation for these asymmetries. Additionally, our findings suggest that improving the quality of financial institutions alone is unlikely to boost quality or lower export prices in low-income countries. Theoretically, we provide a unifying framework to explain why and how the effects of FD on export quality and prices differ across countries. A key component of our model is based on the
Economic Papers: A Journal of Applied Economics and Policy, Nov 22, 2020
This paper investigates asymmetry and local leverage behaviour in individual and aggregate market... more This paper investigates asymmetry and local leverage behaviour in individual and aggregate markets of leading cryptocurrencies, and compares such characteristics to diverse traditional emerging asset classes. Generally different from the cryptocurrencies, the results show diffuse evidence of asymmetry and a significant presence of local leverage in the emerging markets. New findings indicate that mega‐size cryptocurrencies like Bitcoin and Ripple exhibit return‐volatility behaviour whereby volatility changes in their markets increase rather by a response to positive shocks than by a response to negative shocks. Akin to safe net assets, particularly gold, the inverse asymmetric reactions of the cryptocurrency markets position them distinctively from the existing emerging markets, suggestive that the digital assets stand to offer potentials beyond being diversifiers.
Uploads
Papers by Paul Alagidede