An analysis of Granger causality between sovereign credit rating and economic growth in Sub-Saharan Africa

The authors study the performance of mean-variance optimized (MVO) equity portfolios for retail investors in various markets in the U.S. and around the world. Actively managed equity mutual funds have relatively high fees and tend to underperform their benchmark. Index funds such as exchange traded funds still charge appreciable fees, and only deliver the performance of the benchmark. The authors find that MVO portfolios are relatively easy to manage by a retail investor, and that they tend to outperform their benchmark or, at worst, equal its performance, even after adjusting for risk. Moreover, they show that the performance of these funds is not particularly sensitive to the frequency at which they are rebalanced so that, in the limit, an investor might have to rebalance his/her portfolio only once a year. This last finding translates into very low trading costs, even for retail investors. Thus, the authors conclude that MVOs offer an easy, cheap alternative to invest in the world’s equity markets.

This study examines the impact of International Financial Reporting Standards (IFRS) on the stock exchange development (SED) in sub-Saharan Africa (SSA). The essence is to offer suggestions on how the adoption of IFRS in the SSA region can benefit their SED. The study employed logistic regression analysis of data for 40 SSA countries for the period 2010–2018. Data were extracted from the World Bank’s World Development Index (WDI) database, sampled countries’ stock exchange websites, and the IFRS website. The dependent variable (SED) took two values: 1 – if a stock exchange is established in the observed country’s period, otherwise – 0. The model result was well fitted: p < 0.0001, correctly classified an overall SED accuracy up to 84.84% and excellent area predictive power at a receiver operator characteristic of 0.9347. The study observed that IFRS had high degree of co-movement with SED, and changes in IFRS had a strong positive impact on SED. Besides, changes in market size, ICT infrastructure, and public sector management and institution (PSMI) had a positive and significant impact on SED. The odd ratio of SED compared to non-SED is greatest with IFRS (40.67 times), and for the other variables, the ratios are: market size (4.02), ICT infrastructure (1.26), and PSMI (2.73), respectively. On a greater extent, SSA countries should allow the use of IFRS for financial reporting to expedite SED.

This study aims to explore the cross-country relationship between economic globalization and growth. It assesses the implications of globalization for the world economy and groups of countries with different income levels. The study employed panel data from the World Bank, the Fraser Institute, and the Swiss Federal Institute of Technology in Zürich for 122 countries from 1970 to 2018. Two-stage fixed effect model was used to assess the impact of globalization on growth. The reverse causality was estimated using the method of instrumental variables. The results showed that the world economy benefited from globalization. In turn, greater openness has reinforced economic growth. The study confirms that globalization benefits are distributed unequally. A significant positive impact of globalization on economic growth is confirmed for high and lower-middle-income economies with coefficients of 0.02 and 0.01, respectively. Economic growth of high-income countries is determined by financial globalization, while lower-middle-income countries rely on trade and financial openness. Negative implications of economic globalization took place in upper-middle-income countries with a coefficient of -0.02. In these countries, correlation between trade globalization and growth is -0.13. The effect of economic growth on globalization is found to be significantly positive for high-income (11.08) and upper-middle-income countries (9.62) and statistically insignificant for lower-middle-income economies.