MNB 3701 ASSIGNMENT 2

MNB3701 ASSIGNMENT 2 UNIQUE NUMBER THE ROLE OF LOCAL FINANCIAL MARKET ON ECONOMIC GROWTH: A SAMPLE OF THREE AFRICAN ECONOMIC GROUPINGS TABLE OF CONTENTS 1. QUESTION 1: IDENTIFY AND CRITICALLY EVALUATE THE ROLES PLAYED BY LOCAL FINANCIAL MARKETS IN THE DETERMINATION OF A COUNTRY’S ECONOMIC GROWTH? MOTIVATE YOUR ANSWER WITHIN THE PURVIEW OF EMERGING AFRICAN COUNTRIES………………........1 2. QUESTION 2: HOW MUCH INFLUENCE DOES INFLATION HAVE ON CAPITAL BUDGETING? MOTIVATE YOUR ANSWER IN RESPECT OF ECONOMIC REALITIES IN DEMOCRATIC REPUBLIC OF CONGO………………………………………..…………………………………….3 3. QUESTION 3: WHY WOULD TRANSFER PRICING MANIPULATION NEGATIVELY AFFECT SOUTH AFRICAN FISCUS? USE PRACTICAL EXAMPLES WHERE NECESSARY……………………..……………………….6 QUESTION 1: IDENTIFY AND CRITICALLY EVALUATE THE ROLES PLAYED BY LOCAL FINANCIAL MARKETS IN THE DETERMINATION OF A COUNTRY’S ECONOMIC GROWTH? MOTIVATE YOUR ANSWER WITHIN THE PURVIEW OF EMERGING AFRICAN COUNTRIES. The Southern, the Western and the Northern African regions are known as the three major African groupings where it is necessary to compare each of their individual economic performance as well as to examine the role of local financial markets development on each regions’ economic growth. The efficiency of local financial markets is strongest in low and middle –income economies and therefore it places as important impulse on economic growth. By improving the access to and cost of capital of resident corporations, the activities of the local financial markets catalyse economic growth. The local financial market need to efficiently transfer, allocate and repatriate financial resources for multinational corporations and therefore capital markets need to be well-functioning and efficiently supervised. ‘Research also finds that developed local financial markets are capable of accelerating economic growth, as they enhance efficient resource allocation.’ (Rousseau and Wachtel, 2000, cited in African Journal of Economic and Management Studies, 2016, p. 226). Healthy local financial markets enable investors to rebalance their portfolios cheaply and quickly. While the local financial markets are fledgling and lacking the requisite supporting infrastructures that could aid the African countries’ viability, the political economy of most African countries stay shaky. Banks as major components of financial market, enhance t