African Review of Economics and Finance <p>The <em>African Review of Economics and Finance</em> (AREF) is the official journal of the African Review of Economics and Finance Consult (AREF Consult). The journal welcomes high quality articles in theoretical and empirical economics, with special emphasis on African economies. Theoretical contributions can be either innovation in economic theory or rigorous new applications of existing theory. Pure theory papers include, but are by no means limited to, those in behavioural economics and decision theory, game theory, general equilibrium theory, contract theory, public finance, financial economics, industrial organisation, labour economics, development theory and the theory of economic mechanisms.</p> <p>At the same time AREF publishes papers of high quality dealing with the confrontation of relevant economic theory with observed data through the use of adequate econometric methods. Empirical papers cover topics such as estimation of established relationships between economic variables, testing of hypotheses derived from economic theory, policy evaluation, simulation, forecasting, methodology, econometric methods and measurement.</p> <p>As a general interest journal, AREF emphasizes the replicability of empirical results. Replication studies of important results in the literature - both with positive or negative results - may be published as short papers in AREF. Authors are expected to make available their data set in case readers, editors or referees should want to replicate results reported in submitted contributions. AREF also welcomes book reviews, and special issues of international conferences and workshops.</p> <p>Other websites related to this journal:&nbsp;<a title="" href="" target="_blank" rel="noopener"></a> and&nbsp;<a title="" href="" target="_blank" rel="noopener"></a></p> en-US <p>To assure the integrity, dissemination, and protection against copyright infringement of published articles, you will be asked to assign us, via a Publishing Agreement, the copyright in your article. Your Article is defined as the final, definitive, and citable Version of Record, and includes: (a) the accepted manuscript in its final form, including the abstract, text, bibliography, and all accompanying tables, illustrations, data; and (b) any supplemental material. Our Publishing Agreement with you will constitute the entire agreement and the sole understanding between you and us; no amendment, addendum, or other communication will be taken into account when interpreting your and our rights and obligations under this Agreement.</p> (Prof. Paul Alagidede) (Editor: Dr. Franklin Obeng-Odoom) Mon, 26 Sep 2022 17:29:50 +0000 OJS 60 Editorial: The economic effects of COVID-19 on African economies <p>No abstract</p> Muazu Ibrahim, Gideon Boako Copyright (c) 0 Mon, 26 Sep 2022 00:00:00 +0000 An event study analysis of Bitcoin and Altcoins under COVID-19 <p>Operating through blockchain, cryptocurrencies eliminate intermediaries and encourage transparency between parties. Although Bitcoin continues to be the most widely used cryptocurrency, its increased attractiveness to investors has led to the emergence of Altcoins (alternative cryptocurrencies other than Bitcoin). Employing an event study approach using the daily price series for the sample period from 1 January 2018 to 17 July 2020, the study aims to determine the impact of Covid-19 on the value of both Bitcoin and Altcoins. The evidence shows that the abnormal returns of Bitcoin and Altcoins around Covid-19 dates are negative and Altcoins are more adversely affected by the pandemic than Bitcoin. The study also documents that most altcoins rely on the same block chain technology aiming to complement or improve certain Bitcoin characteristics, and the high correlation between Bitcoin and Altcoins are likely to fail cross-currency hedging strategies during the pandemic crisis.</p> Mathew Abraham Copyright (c) 0 Mon, 26 Sep 2022 00:00:00 +0000 Coronavirus and government response conundrum in Africa: How effective are the stringency measures? <p>Reducing the spread of infections and deaths attributed to the coronavirus (COVID-19) are a major concern of countries, particularly in Africa. This concern has led governments to institute several restrictive measures aimed at containing the COVID-19 crisis. Notwithstanding the restrictions, the number of cases and COVID-19 deaths continue to increase, raising questions regarding the effectiveness of the restrictions. In addition to determining the impact of the restrictions on COVID-19 deaths, this study examines how the restrictions influence the COVID-19 mortalities through its impact on the confirmed cases. By relying on daily data from 49 African countries, the study finds that higher restrictions measured by stringency index are associated with lower deaths. While the number of confirmed cases increase deaths, higher stringency index dampens the mortality-increasing effect of the confirmed cases. However, possible nonlinearities exist which suggest that the magnitude of reduced deaths is not the same for all countries. The study observes that while higher stringency index generally lowers death cases, its negative effect is huge for countries with stringency index above the threshold. Balancing the desire for economies to build–back better against the proliferation of COVID–19 are two conundrums African governments face.</p> Muazu Ibrahim, Allan Mukungu Copyright (c) 0 Mon, 26 Sep 2022 00:00:00 +0000 Macroeconomic impact of the COVID-19 pandemic on the Ghanaian economy <p>The implications of coronavirus (COVID-19) on the various sectors of the economy cannot be overemphasised. To provide the macroeconomic impact of the pandemic on the Ghanaian economy for the next five years, the study adopted the United Nations Economic Commission for Africa (ECA) Macroeconomic model developed for Ghana. The study revealed that by the end of 2020, employment is expected to decline by 6.3 percent, debt to GDP ratio increase to 78.4 percent, fiscal balance reaching negative 13.5 percent, GDP expected to grow at 0.95 percent, expected decline in demand for goods and services and private consumption among others. To minimise the effect of the pandemic on the economy, the government should provide various incentives such as soft loans and tax reliefs to the private sector, reduce export tax to boost export growth and also provide the incentives for value-addition to the country’s export among others.</p> Eric Amoo Bondzie, William Godfred Cantah, Emmanuel Wiafe Agyapong, Ferdinand Ahiakpor Copyright (c) 0 Mon, 26 Sep 2022 00:00:00 +0000 Assessing the impact of COVID-19 induced rating downgrades on Eurobond yields in Africa <p>There was an outcry from policymakers over sovereign credit rating downgrades of African countries during the unprecedented COVID-19 lockdown periods. This study investigates whether sovereign downgrades during the time African countries were hit by COVID-19 had an impact on sovereign bond yields. Applying an event study analysis on the Eurobonds yields of 4 African countries that were downgraded during this period shows that there is significant evidence of excess volatility around the downgrade event and a net increase in yields within the rating event window. The results align to the view that rating agencies negatively impact macroeconomic conditions through their procyclical ratings. Hence, ratings should be regulated and controlled during crises times to avoid the procyclical impact of ratings.</p> Misheck Mutize Copyright (c) 0 Mon, 26 Sep 2022 00:00:00 +0000 The impact of COVID-19 on stock market liquidity: Evidence from the Johannesburg Stock Exchange <p>Liquidity is an important feature of any well- functioning financial market. The recent outbreak of COVID-19 has created economic turbulence around the world, subsequently, exacerbating the volatility of global financial markets. Therefore, the objective of this study is to examine the impact of COVID-19 on the liquidity of firms trading on the Johannesburg Stock Exchange (JSE). Using a sample period of March 5, 2020 to June 12, 2020, the findings of this study suggest that growth in confirmed COVID-19 cases dries up the liquidity of firms constituted in the JSE All Share Index. However, growth in deaths caused by COVID-19 leads to an increase in the liquidity of these firms. Further analysis reveals that the negative relationship between growth in confirmed cases and changes in liquidity holds for companies of all sizes whilst the positive relationship between growth in deaths and changes in liquidity holds only for medium and small market capitalization stocks. Overall, for companies of all sizes, growth in confirmed COVID-19 cases exhibits a greater impact on liquidity relative to growth in COVID-19 deaths.</p> Damien Kunjal Copyright (c) 0 Mon, 26 Sep 2022 00:00:00 +0000 Modeling and forecasting of COVID-19 from the context of Ghana <p>Developing countries have had their share regarding the spread and effect of Coronavirus (COVID-19) and Ghana is no exception. We have used the data on new deaths, total deaths, total cases, new cases, collected on a daily basis from 13th March 2020 to 30th September 2020, obtained from the Ghana Health Services. We then considered appropriate time series models. This has provided robust results to help make an informed decision towards the future. The forecasted results (from the best fitted models) reveals adecrease in an amount of 174-88 in the daily new cases by flowing a linear trend, which also leads to decrease in total cases by following the same trend (from 46600 to 44942 in numbers) during the period 1-10-2020 to 10-10-2020. The government of Ghana should strictly enforce protocols established to curb COVID-19 in Ghana, encourage social distancing and other COVID-19 prevention protocols to reduce the spread of COVID-19 new cases and deaths.&nbsp;</p> Jamal Mohammed, Abdullah Mohammed, Ghazi Al Khatib, Pradeep Mishra, Prince Adjei, Pankaj Kumar Singh, S.R. Krishan Priya, Soumitra S. Das Copyright (c) 0 Mon, 26 Sep 2022 00:00:00 +0000 Casablanca Stock Exchange response to the COVID-19 pandemic <p>This study investigates the Casablanca Stock Exchange response to the COVID-19 by considering the impact of the COVID-19 related cases and deaths of eleven selected countries affected by the COVID-19, including Morocco, on the Moroccan Stock Market (MASI Index), over the period from June 13, 2019, to June 11, 2020. This study employs the GARCH (1,1) model for this purpose, in which we are allowing for the impact of changes in the COVID-19 related cases and deaths in both the conditional-mean and the conditional heteroscedasticity equations. Furthermore, we extend our analysis by employing the VAR-X model to examine stock market returns and trading volume response to the COVID-19 related cases and deaths. Finally, we use the Markov-Switching models to inspect whether the COVID-19 has caused a structural break in the stock market returns. Empirical results indicate that in some of the selected countries, changes in the number of cases and deaths related to the COVID-19 have had an impact on the volatility of the MASI Index as well as the MASI Index returns. Furthermore, the Markov-Switching model results suggest that at the end of February 2020, the COVID-19 pandemic crisis has caused a structural break on MASI Index returns and the relationship between trading volume and MASI index returns has turned negative.</p> Khalil Nait Bouzida, Ulrich Ekouala Makala Copyright (c) 0 Mon, 26 Sep 2022 00:00:00 +0000 Investor herding during COVID-19: Evidence from the South African Exchange Traded Fund market <p>The volatility of financial markets has been exacerbated by the recent outbreak of the COVID-19 pandemic. During periods of increased market volatility, investors tend to exhibit herd behaviour. However, investor herd behaviour may result in suboptimal investment decisions and market anomalies. Given the rising popularity of Exchange Traded Funds (ETFs), the objective of this study is to investigate whether the COVID-19 pandemic has induced investor herd behaviour in the South African ETF market. To achieve the objective of this study, ETFs trading on the Johannesburg Stock Exchange (JSE) are analyzed from March 4, 2019 to August 14, 2020. The results of this study indicate that investor herd behaviour is not present in the South African ETF market during the full sample period. The Chow breakpoint test confirms that there is indeed a structural break on March 5, 2020 – the date on which South Africa confirmed its first COVID-19 case. However, the subperiod analysis reveals that herd behaviour is not present in the South African ETF market before and after South Africa confirmed its first COVID-19 case. Therefore, this study concludes that the COVID-19 pandemic and its related market volatility has not induced herd behaviour in the South African ETF market. These findings suggest that ETF investors are not influenced by the herd bias and, therefore, this finding could be an indication that ETF traders make informed trading decisions that are rational.</p> Damien Kunjal, Faeezah Peerbhaia Copyright (c) 0 Mon, 26 Sep 2022 00:00:00 +0000