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dc.contributor.authorBosupeng, Mpho
dc.contributor.authorDzator, Janet
dc.contributor.authorNadolny, Andrew
dc.date.accessioned2022-03-22T23:18:17Z
dc.date.available2022-03-22T23:18:17Z
dc.date.issued2019
dc.identifier.issn1911-8066
dc.identifier.doi10.3390/jrfm12020101
dc.identifier.urihttp://hdl.handle.net/10072/413479
dc.description.abstractThis study investigates the impact of exchange rate misalignment on outward capital flight in Botswana over the period 1980–2015. The study uses the autoregressive distributed lag (ARDL) approach to cointegration and the Toda and Yamamoto (1995) approach to Granger causality. Botswana’s currency misalignment was caused by current account imbalances. The most important determinant of capital flight from Botswana is trade openness, which indicates that exportable commodities are misinvoiced leading to net capital outflows. Our main findings show that in the long-run, when the currency is overvalued, the volume of capital flight through trade misinvoicing declines and increasing foreign reserves does not reduce outward capital flight. However, when the currency is undervalued, the volume of capital flight through trade misinvoicing increases and foreign reserves reduce outward capital flight. Investors respond more to prospects of devaluation than to inflation. Botswana should tolerate overvaluation of the pula of only up to 5%. When the pula is overvalued beyond 5%, capital flight increases substantially. The government has to formulate trade regulations and monitor imported and exported commodities. Botswana should also implement capital controls to limit capital smuggling and maintain monetary autonomy.
dc.description.peerreviewedYes
dc.languageEnglish
dc.publisherMDPI
dc.relation.ispartofpagefrom101
dc.relation.ispartofissue2
dc.relation.ispartofjournalJournal of Risk and Financial Management
dc.relation.ispartofvolume12
dc.subject.fieldofresearchBanking, finance and investment
dc.subject.fieldofresearchcode3502
dc.subject.keywordsSocial Sciences
dc.subject.keywordsBusiness, Finance
dc.subject.keywordsBusiness & Economics
dc.subject.keywordsreal exchange rate
dc.subject.keywordsexchange rate misalignment
dc.titleExchange Rate Misalignment and Capital Flight from Botswana: A Cointegration Approach with Risk Thresholds
dc.typeJournal article
dc.type.descriptionC1 - Articles
dcterms.bibliographicCitationBosupeng, M; Dzator, J; Nadolny, A, Exchange Rate Misalignment and Capital Flight from Botswana: A Cointegration Approach with Risk Thresholds, Journal of Risk and Financial Management, 2019, 12 (2), pp. 101
dcterms.licensehttps://creativecommons.org/licenses/by/4.0/
dc.date.updated2022-03-22T22:51:45Z
dc.description.versionVersion of Record (VoR)
gro.rights.copyright© 2019 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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gro.griffith.authorBosupeng, Mpho


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