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Welcome to the NWU Repository, the open access Institutional Repository of the North-West University (NWU-IR). This is a digital archive that collects, preserves and distributes research material created by members of NWU. The aim of the NWU-IR is to increase the visibility, availability and impact of the research output of the North-West University through Open Access, search engine indexing and harvesting by several initiatives.

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Time-Frequency Co-movement of South African Asset Markets: Evidence from an MGARCH-ADCC Wavelet Analysis
(University of Banja Luka, Faculty of Economics, 2024) Fabian Moodley et al
The growing prominence of generating a well-diversified portfolio by holding securities from multi-asset markets has, over the years, drawn criticism. Various financial market events have caused asset markets to co-move, especially in emerging markets, which reduces portfolio diversification and enhances return losses. Consequently, this study examines the time–frequency comovement of multi-asset classes in South Africa by using the Multivariate Generalized Autoregressive Conditional Heteroscedastic–Asymmetrical Dynamic Conditional Correlation (MGARCH-DCC) model, Maximal Overlap Discrete Wavelet Transformation (MODWT), and the Continuous Wavelet Transform (WTC) for the period 2007 to 2024. The findings demonstrate that the equity–bond, equity– property, equity–gold, bond–property, bond–gold, and property–gold markets depict asymmetrical time-varying correlations. Moreover, correlation in these asset pairs varies at investment periods (short-term, medium-term, and long-term), with historical events such as the 2007/2008 Global Financial Crisis (GFC) and the COVID-19 pandemic causing these asset pairs to co-move at different investment periods, which reduces diversification properties. The findings suggest that South African multi-asset markets co-move, affecting the diversification properties of holding multi-asset classes in a portfolio at different investment periods. Consequently, investors should consider the holding periods of each asset market pair in a portfolio as they dictate the level of portfolio diversification. Investors should also remember that there are lead–lag relationships and risk transmission between asset market pairs, enhancing portfolio volatility. This study assists investors in making more informed investment decisions and identifying optimal entry or exit points within South African multi-asset markets.
Effect of Market-Wide Investor Sentiment on South African Government Bond Indices of Varying Maturities under Changing Market Conditions
(Multidisciplinary Digital Publishing Institute (MDPI), 2024) Fabian Moodley et al
The excess levels of investor participation coupled with irrational behaviour in the South African bond market causes excess volatility, which in turn exposes investors to losses. Consequently, the study aims to examine the effect of market-wide investor sentiment on government bond index returns of varying maturities under changing market conditions. This study constructs a new marketwide investor sentiment index for South Africa and uses the two-state Markov regime-switching model for the sample period 2007/03 to 2024/01. The findings illustrate that the effect investor sentiment has on government bond indices returns of varying maturities is regime-specific and time-varying. For instance, the 1–3-year government index return and the over-12-year government bond index were negatively affected by investor sentiment in a bull market condition and not in a bear market condition. Moreover, the bullish market condition prevailed among the returns of selected government bond indices of varying maturities. The findings suggest that the government bond market is adaptive, as proposed by AMH, and contains alternating efficiencies. The study contributes to the emerging market literature, which is limited. That being said, it uses market-wide investor sentiment as a tool to make pronunciations on asset selection, portfolio formulation, and portfolio diversification, which assists in limiting investor losses. Moreover, the findings of the study contribute to settling the debate surrounding the efficiency of bond markets and the effect between market-wide sentiment and bond index returns in South Africa. That being said, it is nonlinear, which is a better modelled using nonlinear models and alternates with market conditions, making the government bond market adaptive.
SYSTEMATIC LITERATURE REVIEW ON FINANCIAL PERFORMANCE AS ONE OF THE MAIN DRIVERS TOWARDS SUSTAINABLE INVESTMENT
(Multidisciplinary Digital Publishing Institute (MDPI), 2024) Mikaeel Dasoo et al
As the global financial landscape is changing and sustainable investments are increasing in importance, it is important to delve into the finer details of sustainable investments. This systematic review is based on empirical and theoretical studies from the Scopus database, aimed to address the following research question: What are the key themes, financial implications, and drivers of sustainable investment. A total of 697 publications were reviewed between 2018 and 2023, there was an increase in sustainable investment studies over this period, indicating the growing relevance of sustainable investments. Most of these publications focused on the relationship between sustainable investments and financial performance, sidelining publications based on the driving forces and motivations behind sustainable investments. Key findings highlighted that firms that adopt sustainable practices improve their ethical standing, but also gain financially. The systematic review also highlights that there is a positive relationship between ESG and financial performance and that in the cases where a negative relationship was found, it was due to not enough institutional support for ESG initiatives. There is also an influence of internal factors and external pressures that act as a catalyst toward sustainable investments. However, as most publications focused on financial implications, as opposed to the drivers and motivations behind sustainable investments, there appears to be a gap in the literature. As sustainable investments continue to gain popularity among investors, a holistic research approach needs to be taken, which includes financial implications and investment motivations; this is crucial to help investors make informed decisions.
Demographic and Sociocultural Determinants of Financial Literacy in South Africa
(Pontifícia Universidade Católica de São Paulo, 2024) Michael du Preez; SJ Ferreira-Schenk
Financial literacy is rapidly becoming more important as financial markets continue to evolve and new and more complex financial products are introduced. This study investigates the relationship between demographic and sociocultural variables and the level of financial literacy of individual investors in South Africa. This study is significant as it provides policymakers with target areas to provide incentives towards financial education programmes. Secondary data were obtained from a private domain where a private investment company collected primary data using an electronic quantitative survey. The sample consisted of 1, 059 individual investors. The study found that people over 50 years of age, men, whites, people with common-law spouses, and people who owned homes without a mortgage payment reported the highest degree of financial and investment knowledge. Groups that reported a low degree of financial and investment knowledge were individuals between the ages of 35 and 49, females, coloureds, divorced individuals, and individuals living with relatives. Health status and education were positively correlated with the financial and investment knowledge of individual investors. Policymakers should aim to target the groups identified by the study that show a low degree of financial literacy with financial education to promote wealth creation, which could benefit the economy by promoting investment and economic participation while simultaneously trying to address structural issues such as poverty and inequality.
Modelling Factors Influencing Bank Customers Readiness for Artificial Intelligent Banking Products
(University of Banja Luka, Faculty of Economics, 2024) L. Garekwe, S. J. Ferreira-Schenk; Zandri Dickason-Koekemoer
In the era of globalisation and technological development, artificial intelligence (AI) plays a significant role in financial activities and services. AI in financial technology has a clear potential to accelerate the financial industry’s transformation by offering excellent value to customers by providing tailor-made products and services, thus improving customer experience. The paper aims to model the factors influencing bank customers’ readiness for artificially intelligent banking products within the South African banking sector. Data were collected from 346 banking customers within South Africa. The study results revealed that demographic and socio-cultural variables influence the readiness for artificially intelligent banking products. Behavioural finance biases also influence bank customers’ readiness for artificially intelligent banking products. Furthermore, the study also found that customers’ readiness for artificial intelligent banking products is faced with the limitation of the inaccessibility to technological tools in rural areas. Consequently, policies that can improve infrastructure and enable rural citizens to cope with advanced technology can improve bank customers’ readiness for artificially intelligent banking products in South Africa.