IDEAS home Printed from https://ideas.repec.org/a/rbs/ijbrss/v12y2023i7p263-270.html

Stokvel saving and banking sector liquidity in South Africa: cointegration and short-run dynamics

Author

Listed:
  • Lindiwe Ngcobo

    (Lecturer Department of Finance, Risk Management and Banking, University of South Africa, Pretoria, South Africa)

  • Joseph Chisasa Joseph

    (Chair College of Economic and Management Science Transformation, University of South Africa, Pretoria, South Africa)

  • Mantepu Tshepo MaseTshaba

    (Director School of Economic and Financial Sciences, College of Economic and Management Sc., University of South Africa, South Africa)

Abstract

Stokvel is a term used in South Africa to denote an informal saving club. A large population of South Africa are members of one stokvel or the other. A large amount of stokvel savings go unaccounted for in the banking sector resulting in distortions in the flow of funds in the banking sector. Thus, the objective of this paper was to establish the presence of a long-run relationship and causality between stokvel savings, money supply, gross domestic product growth rate and banking sector liquidity in South Africa. Applying the Autoregressive Distributed Lag (ARDL) and Error Correction Model (ECM) techniques on quarterly time series data for the period from 1987Q3 to 2020Q1, the study reveals that in the long run, stokvel savings and money supply were found to have a negative relationship with banking sector liquidity albeit insignificant, however, gross domestic product growth rate exhibited a negative and statistically significant relationship at 1%. The coefficient of the error correction model (ECM(-1)) was, as expected, negative and statistically significant thus providing evidence of a short-run relationship. This study concludes that informal savings must be included in the formal banking services to harness the cash that is held by the informal sector and thus improve banking sector liquidity while minimizing the prevalence of financial disintermediation. Key Words:stokvel, banking sector liquidity, ARDL, ECM approach

Suggested Citation

  • Lindiwe Ngcobo & Joseph Chisasa Joseph & Mantepu Tshepo MaseTshaba, 2023. "Stokvel saving and banking sector liquidity in South Africa: cointegration and short-run dynamics," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 12(7), pages 263-270, October.
    • Handle: RePEc:rbs:ijbrss:v:12:y:2023:i:7:p:263-270
    DOI: 10.20525/ijrbs.v12i7.2850
    as

    Download full text from publisher

    File URL: https://ssbfnet.com/ojs/index.php/ijrbs/article/view/2850/1998
    Download Restriction: no
    File URL: https://doi.org/10.20525/ijrbs.v12i7.2850
    Download Restriction: no
    File URL: https://libkey.io/10.20525/ijrbs.v12i7.2850?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Itumeleng Pleasure Mongale & Tumelo Mashamaite & Nyiko Khoza, 2018. "Household savings, financing and economic growth in South Africa," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(1), pages 105-116, January.
    2. Charles Komla Adjasi & Charles Amo Yartey, 2007. "Stock Market Development in Sub-Saharan Africa: Critical Issues and Challenges," IMF Working Papers 2007/209, International Monetary Fund.
    3. Biyase Mduduzi & Fisher Bianca, 2017. "Determinants of Access to Formal Credit by the Poor Households," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 62(1), pages 50-60, April.
    4. Bolnick, Bruce R., 1992. "Moneylenders and informal financial markets in Malawi," World Development, Elsevier, vol. 20(1), pages 57-68, January.
    5. Lindiwe Ngcobo & Joseph Chisasa, 2018. "Characteristics of Credit Instruments Issued by Stokvels in South Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 10(6), pages 240-250.
    6. Cordelia Onyinyechi Omodero, 2019. "Effect of Money Supply on Economic Growth: A Comparative Study of Nigeria and Ghana," International Journal of Social Science Studies, Redfame publishing, vol. 7(3), pages 16-23, May.
    7. Mierau, Jochen O. & Mink, Mark, 2013. "Are stock market crises contagious? The role of crisis definitions," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 4765-4776.
    8. Mongale, Itumeleng Pleasure & Mashamaite, Tumelo & Khoza, Kyiko, 2018. "Household savings, financing and economic growth in South Africa," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 14(01), January.
    9. Janice Tieguhong Puatwoe & Serge Mandiefe Piabuo, 2017. "Financial sector development and economic growth: evidence from Cameroon," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 3(1), pages 1-18, December.
    10. James, Deborah, 2017. "Deductions and counter-deductions in South Africa," LSE Research Online Documents on Economics 85975, London School of Economics and Political Science, LSE Library.
    11. Artur Ribaj & Fitim Mexhuani, 2021. "The impact of savings on economic growth in a developing country (the case of Kosovo)," Journal of Innovation and Entrepreneurship, Springer, vol. 10(1), pages 1-13, December.
    12. Syed Tehseen Jawaid & Faisal Sultan Qadri & Nasir Ali, 2011. "Monetary-Fiscal-Trade Policy and Economic Growth in Pakistan: Time Series Empirical Investigation," International Journal of Economics and Financial Issues, Econjournals, vol. 1(3), pages 133-138, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lindiwe Ngcobo, 2023. "The Relationship Between Stokvels and Banking Sector Efficiency: An ARDL Approach," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 15(11), pages 1-40, November.
    2. Kunle Bankole Osinusi & Nurudeen Abiodun Lawal & Sodiq Olaide Bisiriyu, 2022. "Trade Balance, Exchange Rate and Money Supply in Nigeria: Growth Implications and Lesson for African Countries," Management & Economics Research Journal, Faculty of Economics, Commercial and Management Sciences, Ziane Achour University of Djelfa, vol. 4(2), pages 25-44, September.
    3. Gibogwe, Vincent & Nigo, Ayine & Kufuor, Karen, 2022. "Institutional Quality And Economic Growth In Tanzania," MPRA Paper 115400, University Library of Munich, Germany.
    4. Gibogwe, Vincent & Nigo, Ayine R.S. & Kufuor, Karen, 2022. "Institutional Quality and Economic Growth in Tanzania," MPRA Paper 115486, University Library of Munich, Germany, revised 28 Nov 2022.
    5. Gibogwe, Vincent & Nigo, Ayine R.S. & Kufuor, Karen, 2022. "Foreign direct investment and economic growth in Tanzania," MPRA Paper 115028, University Library of Munich, Germany, revised 20 Oct 2022.
    6. Busra Agan Celik & Kingsley Okiwelu & Stephen Obinozie Ogwu & Gabriel Chukwuka Nzeadachie, 2026. "The moderating role of institutional quality in the debt stock-financial development-economic growth nexus: evidence from the panel QARDL model," SN Business & Economics, Springer, vol. 6(4), pages 1-36, April.
    7. SAIBU, Olufemi Muibi, 2012. "An analysis of causal nexus between foreign direct investment, exchange rate and financial market development in Nigeria (1970 to 2009)," MPRA Paper 42429, University Library of Munich, Germany.
    8. Guillaume Edou Tchidi & Wei Zhang, 2025. "Mediating effect of financial inclusion on FinTech innovations and economic development in West Africa: Evidence from the Benin Republic," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 30(2), pages 1032-1048, April.
    9. Primrose Zama Ngema & Melusi Sibanda & Lovemore Musemwa, 2018. "Household Food Security Status and Its Determinants in Maphumulo Local Municipality, South Africa," Sustainability, MDPI, vol. 10(9), pages 1-23, September.
    10. Abdala, Zédou & Goudoussou, Moumin & Timbi, Sézard, 2024. "Can Financial Development Incur Budget Deficits? An ARDL Cointegration Analysis for Cameroon," African Journal of Economic Review, African Journal of Economic Review, vol. 12(01), March.
    11. Vanessa da Silva Mariotto Onody & Ana Catarina Gandra de Carvalho & Eduardo Polloni-Silva & Guilherme Augusto Roiz & Enzo Barberio Mariano & Daisy Aparecida Nascimento Rebelatto & Herick Fernando Mora, 2022. "Corruption and FDI in Brazil: Contesting the “Sand” or “Grease” Hypotheses," Sustainability, MDPI, vol. 14(10), pages 1-18, May.
    12. Shaheel Rafique, 2006. "Implications of informal credit for policy development in India for building inclusive financial sectors," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 13(1), pages 101-127, June.
    13. Simplice Asongu & Uduak S. Akpan & Salisu R. Isihak, 2018. "Determinants of foreign direct investment in fast-growing economies: evidence from the BRICS and MINT countries," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 4(1), pages 1-17, December.
    14. Parmendra Sharma & Eduardo Roca, 2011. "Reâ Designing Financial Systems: A Review of the Role of Stock Markets in Developing Economies," Discussion Papers in Finance finance:201120, Griffith University, Department of Accounting, Finance and Economics.
    15. Naliniprava Tripathy & Shekhar Mishra, 2023. "The Dynamics of Cointegration Between Economic Growth and Financial Development in Emerging Asian Economy: Evidence from India," Vision, , vol. 27(4), pages 485-497, August.
    16. Tibebe A. Assefa & André Varella Mollick, 2017. "Financial Development and Economic Growth in Africa," Journal of African Business, Taylor & Francis Journals, vol. 18(3), pages 320-339, July.
    17. Marinela Adriana Finta & Bart Frijns & Alireza Tourani-Rad, 2019. "Time-varying contemporaneous spillovers during the European Debt Crisis," Empirical Economics, Springer, vol. 57(2), pages 423-448, August.
    18. Hamdi Becha & Afifa Ferhi & Maha Kalai & Kamel Helali, 2026. "Non-linearity Inflation-Growth relationship in Tunisia: application with threshold regression model," SN Business & Economics, Springer, vol. 6(3), pages 1-40, March.
    19. David G. McMillan & Pako Thupayagale, 2009. "The efficiency of African equity markets," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 26(4), pages 275-292, October.
    20. André Marie Mbakop & Joseph Voufo & Florent Biyeme & Jean Raymond Lucien Meva’a, 2022. "Moving to a Flexible Shop Floor by Analyzing the Information Flow Coming from Levels of Decision on the Shop Floor of Developing Countries Using Artificial Neural Network: Cameroon, Case Study," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 23(2), pages 255-270, June.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rbs:ijbrss:v:12:y:2023:i:7:p:263-270. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Umit Hacioglu (email available below). General contact details of provider: https://edirc.repec.org/data/ssbffea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.