Purpose

The aim of this paper is to analyse the relationship between public debt, corporate debt service costs and private capital formation in South Africa.

Design/methodology/approach

To capture the long-run characteristic of investment, the study adopts the Fully Modified Ordinary Least Squares approach and tests for cointegration using Hansen (1992)'s Parameter Instability test.

Findings

We find that private capital formation increases in domestic debt and decreases in external debt during the pre-crisis period. However, during the period post the Global Financial Crisis, we find evidence of domestic public debt crowding out private capital formation, whereas external debt crowds-in capital formation. Debt service costs are found to reduce investment due to the effect of the debt overhang throughout the period under analysis.

Research limitations/implications

The paper has important implications for macroeconomic policy. In particular, there is need for deleveraging and allocation of a higher proportion of debt to public infrastructure expenditure which has complementary effects on private investment.

Practical implications

Debt overhang signal that South African firms could be over-leveraged, which hinders future growth prospects. Firms that face high levels of debt should consider debt restructuring.

Originality/value

Empirical studies undertaken to explore this relationship have yielded contradicting results suggesting that the relationship between public debt and private investment is heterogeneous depending on a given economy or prevailing macroeconomic environment. In particular, existing research does not provide evidence on whether recent increases in public debt in South Africa have led to crowding-in or crowding-out of private investment. This paper therefore contributes to empirical literature on the impact of public debt on private investment within a small open economy.

中文翻译：

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偿债成本和公共债务对南非私人资本形成的影响

目的

本文的目的是分析南非公共债务、企业偿债成本和私人资本形成之间的关系。

设计/方法/方法

为了捕捉投资的长期特征，本研究采用完全修正的普通最小二乘法并使用 Hansen (1992) 的参数不稳定性检验进行协整检验。

发现

我们发现，在危机前时期，私人资本形成增加了内债，减少了外债。然而，在全球金融危机后的时期，我们发现了国内公共债务挤出私人资本形成，而外债挤出资本形成的证据。由于整个分析期间的债务积压的影响，债务偿付成本被发现会减少投资。

研究限制/影响

该论文对宏观经济政策具有重要意义。尤其是需要去杠杆化并将更高比例的债务分配给公共基础设施支出，这对私人投资具有互补作用。

实际影响

债务积压表明南非公司可能过度杠杆化，这阻碍了未来的增长前景。面临高额债务的公司应考虑债务重组。

原创性/价值

为探索这种关系而进行的实证研究得出了相互矛盾的结果，表明公共债务和私人投资之间的关系因特定经济或当前宏观经济环境而异。尤其是，现有研究没有提供证据表明南非最近公共债务的增加是否导致了私人投资的挤入或挤出。因此，本文为关于小型开放经济体中公共债务对私人投资影响的实证文献做出了贡献。