Dr Francis Mulenga Muma | Xiamen University Malaysia (original) (raw)
Papers by Dr Francis Mulenga Muma
The purpose of this paper is to examine the relationship between financial development—bank and s... more The purpose of this paper is to examine the relationship between financial development—bank and stock market—and economic growth in Zimbabwe. Using data during the period from 2005 to 2013, the study employed a VECM for the short run Controls variables. This offers a possibility of applying VAR in order to use integrated multivariate time series and avoid spurious regression as the interest rates appear to have long run positive impact on economic growth. This means that banking sector performs better than the stock markets if the interest rate is positively related to economic growth. The findings suggest a positive relationship between efficient stock market and economic growth both in short run and long run. Interest rates have a negative effect, while market capitalisation has a positive effect on growth. It is concluded that financial sector is important in the process of sustainable economic development in Zimbabwe.
ABSTRACT It is now two years since the world economic crisis started and spread vigorously acros... more ABSTRACT
It is now two years since the world economic crisis started and spread vigorously across nations. The financial crisis in 2008 originated in the advanced developed countries, but it spread quickly to become a world economic crisis affecting all countries, including the emerging economies and Less Developed Countries (LDCs). The LDCs or Low Income Countries (LICs) as they are called in other economic literatures were heavily affected by the crisis in real terms.
The crisis started in the USA due to the banks dealing in securitization on mortgages. At that time those mortgages were securitized, the buyers, in secondary market assumed that housing prices would ever be rising up, and therefore the payments were not very risky; however when housing prices began to fall, many more borrowers became delinquent than they had been expected. This lead to a bubble in an economy and particularly the mortgage market as value of most assets became eroded away. The other issue that contributed to the financial crisis was the credit default swaps (CDS). The financial crisis in the USA eroded the purchasing power of the people and this translated into reduced aggregate demand for real sector economy. Through pass through effects this further translated into global economic crisis. When the global economic crisis started, initial speculation by some scholars was that the limited integration of LICs into the global financial system might insulate them from the worst effects of the crisis. But as the crisis spread onto the real economy it impacted negatively on LICs. This was done through channels of the impact such as commodity prices, trade, capital markets, revenue pressures, remittances and migration, tourism and human development.
To counter the crisis both advanced and developing countries needed holistic and coordinated approaches for stimuli packages both fiscal and monetary easing policies to boost consumer confidence and revitalize the global economy. Once consumer confidence is restored in advanced countries aggregate demand on LDCs’ commodities is likely to rebound. Further LICs will need substantial additional funding to participate effectively in a global stimulus. Sources of funding for developing countries that could be activated quickly and not subject to inappropriate conditionality are necessary in this case. Developing Countries need more policy space and less conditionalities normally attached to official lending and support provided by international financial institutions. Lastly LICs need to diversify their economies from the reliance of commodities which are vulnerable to the effects of the global recession.
BoZ, Econonomics Dept-Modelling and Forecasting by Dr Francis Mulenga Muma
The purpose of this paper is to examine the relationship between financial development—bank and s... more The purpose of this paper is to examine the relationship between financial development—bank and stock market—and economic growth in Zimbabwe. Using data during the period from 2005 to 2013, the study employed a VECM for the short run Controls variables. This offers a possibility of applying VAR in order to use integrated multivariate time series and avoid spurious regression as the interest rates appear to have long run positive impact on economic growth. This means that banking sector performs better than the stock markets if the interest rate is positively related to economic growth. The findings suggest a positive relationship between efficient stock market and economic growth both in short run and long run. Interest rates have a negative effect, while market capitalisation has a positive effect on growth. It is concluded that financial sector is important in the process of sustainable economic development in Zimbabwe.
ABSTRACT It is now two years since the world economic crisis started and spread vigorously acros... more ABSTRACT
It is now two years since the world economic crisis started and spread vigorously across nations. The financial crisis in 2008 originated in the advanced developed countries, but it spread quickly to become a world economic crisis affecting all countries, including the emerging economies and Less Developed Countries (LDCs). The LDCs or Low Income Countries (LICs) as they are called in other economic literatures were heavily affected by the crisis in real terms.
The crisis started in the USA due to the banks dealing in securitization on mortgages. At that time those mortgages were securitized, the buyers, in secondary market assumed that housing prices would ever be rising up, and therefore the payments were not very risky; however when housing prices began to fall, many more borrowers became delinquent than they had been expected. This lead to a bubble in an economy and particularly the mortgage market as value of most assets became eroded away. The other issue that contributed to the financial crisis was the credit default swaps (CDS). The financial crisis in the USA eroded the purchasing power of the people and this translated into reduced aggregate demand for real sector economy. Through pass through effects this further translated into global economic crisis. When the global economic crisis started, initial speculation by some scholars was that the limited integration of LICs into the global financial system might insulate them from the worst effects of the crisis. But as the crisis spread onto the real economy it impacted negatively on LICs. This was done through channels of the impact such as commodity prices, trade, capital markets, revenue pressures, remittances and migration, tourism and human development.
To counter the crisis both advanced and developing countries needed holistic and coordinated approaches for stimuli packages both fiscal and monetary easing policies to boost consumer confidence and revitalize the global economy. Once consumer confidence is restored in advanced countries aggregate demand on LDCs’ commodities is likely to rebound. Further LICs will need substantial additional funding to participate effectively in a global stimulus. Sources of funding for developing countries that could be activated quickly and not subject to inappropriate conditionality are necessary in this case. Developing Countries need more policy space and less conditionalities normally attached to official lending and support provided by international financial institutions. Lastly LICs need to diversify their economies from the reliance of commodities which are vulnerable to the effects of the global recession.