When multinational corporations misbehave: an analysis of foreign bank currency manipulation in South Africa

• Main Author: Gama, Lindokuhle
• Other Authors: -
• Format: Thesis-Master by Coursework
• Language: English
• Published: Nanyang Technological University 2024
• Subjects: Social Sciences; Foreign banks in South Africa
• Online Access: https://hdl.handle.net/10356/175864
• Institution: Nanyang Technological University

Foreign Direct Investment (FDI) has been touted by some economists as one of the principal ways in which the rest of the world can help the African continent achieve economic growth. On the other hand, a plethora of empirical studies have shown that FDI does little to contribute to economic growth and in many cases sabotages tax revenues and astute governance. In this paper, I assess the ramifications of financial FDI in the South African context by pinning my analysis on a case of currency rigging including 8 multinational foreign banks operating in the country in 2008 to 2013. I also buttress Liu, Fedderke and Simkins, and Fedderke and Mengisteabs’ studies on South Africa’s growth experience by assessing foreign banks’ contributions to the growth factors inherent within the neoclassical growth and the new growth theories. This thesis finds that larger economic events namely, the Great Financial Crisis and the Eurozone crisis explain South Africa’s economic and exchange rate vagaries better than the currency rigging case during this timeframe. Similarly, it also finds that foreign banks’ contributions to economic growth are marginal to those made by local banks. However, foreign banks, as private enterprises, contribute to the tax base and, thus, national savings for investment.