Over the last decade, the South African economy has endured prevailing economic challenges, including weak economic growth, unreliable electricity supply, rising fiscal deficits, declining investment inflows and the inexorable rise in government debt alongside the expected impact of the coronavirus pandemic. Credit ratings have significantly evolved, making them key elements in the modern financial markets because of their creditworthiness opinions, as many investors across the globe rely heavily on their opinions. A quantitative research approach was followed using data from 1994Q1 to 2020Q2. The analysis entailed a descriptive and econometric analysis where two models were estimated using the autoregressive distributed lag (ARDL) model. The findings reveal long-run relationships between economic growth (GDP), risk rating index, foreign direct investment (FDI), exchange rate, gross fixed capital formation and lending rates. The results also reveal a bi-directional causality between economic growth and the rating index and between FDI and the rating index. This study’s findings suggest that investments and economic growth in the country need to be stimulated significantly to impact risk rating agencies decisions. Policymakers need to redirect resources towards effective and efficient capital-forming initiatives and development projects to improve the country’s sovereign risk rating to re-ignite growth.

Political risk is one factor that influences tourism performance as a tourist is more sensitive to the hosting country’s political environment. In addition, to the effect of country risk on the tourism industry, the global economy has recently experienced severe shocks due to high inflation rates, political risk, and currency volatility. This paper aims to investigate the implications of political risk, inflation, and exchange rate volatilities on tourism revenue in South Africa. A sample of 144 monthly data was used to assess both long-run and short-run relationships amongst the study variables using the ARDL cointegration and error correction model approaches to achieve the study objective. Results indicated that political risk, inflation rate, and exchange rate volatility influence long-term revenue changes in the tourism industry. In contrast, real effective exchange rates and inflation significantly impact total revenue in the tourism sector. The findings also indicated that political risk has no short-term effect on tourism revenue. Based on these findings, the study recommends that the country's political stability increase, increasing the number of tourist arrivals and resulting in growing revenue for the tourism industry in S.A. Additionally, the South African reserve bank should revise its exchange-rate pegging, monetary targeting, and inflation targeting to reduce the effects of inflation on tourism revenue.

Table of Content - Article Detail - Proceedings of the 45th International Academic Conference, London

Table of Content - Article Detail - Proceedings of the 52nd International Academic Conference, Barcelona

Studies on the implications of digital financial development and their impact on monetary policy effectiveness have shown mixed results, with some evidence of interdependence and potential transmission challenges. While some studies highlight positive growth impacts moderated by institutions with risks to policy sovereignty from innovations, research on South Africa remains minimal, despite having a mature financial system and rapid uptake of digital finance. The study used an ARDL model with the digital financial development index, inflation, interest rate, financial deepening, and an interaction of the digital financial development index and interest rate to analyse the implications of digital finance and its impact on monetary policy effectiveness in South Africa. Utilising annual data from 1990 to 2024, the results showed that the digital financial development index positively influences inflation in the long run. In addition, interest rates have a significant negative impact on inflation in the long run, while financial deepening, exchange rate and GDP per capita are insignificant in the long run. Furthermore, interest rate interactions with the digital financial development index exert downward inflationary pressure, but the interaction term is statistically significant in the long run. Therefore, digital financial development mitigates the inflationary effect of interest rates and appear to strengthen the monetary policy effectiveness in controlling inflation in the long run. We recommend that policymakers consider incorporating digital financial development indicators into the model for determining interest rates when developing a strategy to control inflation, thereby enhancing monetary policy effectiveness.