Browsing by Author "Obalade, Adefemi A"

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    Connectedness and shock propagation in South African equity sectors during extreme market conditions
    (Multidisciplinary Digital Publishing Institute (MDPI), 2024) Obalade, Adefemi A; Lawrence, Babatunde S.; Doorasamy, Mishelle
    This study examined the connectedness and propagation of risk in the South African equity sectors during the Global Financial Crisis (GFC), the European Debt Crisis (EDC), the US–China trade war, and the COVID-19 pandemic. Daily returns of nine Johannesburg Stock Exchange (JSE) super sectors were examined from 3 January 2006 to 31 December 2021. Applying the connectedness matrix and time-varying parameter vector autoregressive (TVP-VAR) model, in full sample and sub-periods, the study showed that dynamic total connectedness of the super sectors is high in absolute form (62%). Furthermore, it was found that the highest volatility connectedness was during the EDC (68.83%) and during the COVID-19 pandemic (68.57%), followed by the GFC (63.16%) and lastly the US–China trade war (42.09%), respectively. This suggests that the tendency for a systemic risk is highest during the EDC, COVID-19, and GFC periods, and lowest during the US–China trade war. The financial sector was the primary net-transmitter of shocks during the COVID-19 period, while the automobile and parts sector was the strongest net-transmitter of shocks during the GFC, EDC, and US–China trade war. Similarly, the strongest net recipient of shocks during GFC, EDC, and COVID-19 is the chemical super sector. The study concludes that there is a significant volatility connectedness among JSE super sectors. In addition, the JSE super sectors exhibit time-varying connectedness during extreme events. Moreover, the net-transmitter and net-receiver of shock do not change significantly during different crisis periods. The policy implications of the findings are highlighted in the concluding section.
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    Value-adding effect of foreign direct investment inflow on manufacturing: evidence from South Africa
    (Taylor & Francis Group, 2025) Tita, Anthanasius Fomum; Obalade, Adefemi A; Mano, Moreblessing Muneyinazvo
    The manufacturing sector drives economic growth and structural transformation by fostering job creation, innovation and exports. Achieving and sustaining high-income status is challenging without manufacturing development, except for oil-rich nations and small financial hubs. Existing studies have overlooked the relationship between foreign direct investment and manufacturing value-added in emerging markets such as South Africa. This investigation examines the influence of foreign direct investment on manufacturing value added in South Africa. We utilised annual data from 1970 to 2020 and analysed them using linear and nonlinear autoregressive distributed lag (ARDL and NARDL) models to account for possible asymmetric effects. The ARDL analysis reveals that both foreign direct investment inflow and domestic investment negatively impact manufacturing value added in the short and long runs. Under asymmetry analysis, adverse shocks to foreign direct investment negatively affect manufacturing value added more than positive shocks. Positive and negative shocks in trade openness significantly boost MVA, highlighting globalisation’s role in economic growth. These findings underscore the nuanced dynamics between investment flows, trade openness and manufacturing performance. By incorporating asymmetric effects, our study provides new insights for policymakers. The results suggest that strengthening domestic resources mobilisation can support manufacturing growth, reduce reliance on external capital inflows and mitigate vulnerabilities linked to geopolitical risks.