Examining the Effect of Financial Markets Shocks on Financial Stability in South Africa

Authors

  • Tshembhani M. Hlongwane Department of Economics, University of the Western Cape, Bellville, 7535, South Africa.
  • Johannes P. S. Sheefeni Department of Economics, University of the Western Cape, Bellville, 7535, South Africa.

DOI:

https://doi.org/10.32479/ijefi.13452

Abstract

The paper analyzed the impact of financial market shocks on financial market stability. The goal was achieved by employing quarterly time-series data spanning from 2003:Q1 to 2020:Q4. The study used various econometric techniques such as stationarity, determining optimal lag length, cointegration analysis, estimating a vector error correction model, impulse response functions and forecast error variance decomposition. Following this, the long run relationship amongst the variables was established. The findings revealed that inflation has a negative impact on financial stability in both the short and long run. Lastly, it was only the shocks in economic activities that was found to have a significant impact on financial stability.

Keywords:

Financial stability, financial markets, Consumer Price Index., Money supply

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Author Biography

Johannes P. S. Sheefeni, Department of Economics, University of the Western Cape, Bellville, 7535, South Africa.

He is an Economics Professor at the University of the Western Cape

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Published

2022-11-23

How to Cite

Hlongwane, T. M., & Sheefeni, J. P. S. (2022). Examining the Effect of Financial Markets Shocks on Financial Stability in South Africa. International Journal of Economics and Financial Issues, 12(6), 30–37. https://doi.org/10.32479/ijefi.13452

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Articles