Exchange Rate Effects and Performance of Financial Institutions in South Sudan

Abstract

The different financial institutions, including those in South Sudan, have continued to have an uncertain future due to the changes in the macroeconomic environment and the political state of the country. The argument for financial reforms and arrangements requires South Sudan's authorities to devise informed decisions on how to critically match money supply and fulfillment of demand for money to a fairly standardized financial system. The objectives that underpinned the study were to examine the impact of foreign exchange rates on the performance of financial institutions in South Sudan. The study was based on the positivist philosophy because the researchers collected data from the field and used it to arrive at a conclusion. The target population was composed of the 30 registered financial institutions of the CBSS, which was used as the sample. The researcher used secondary data to obtain the findings of the study. In addition to descriptive statistics and diagnostic tests, the researcher also performed regression and correlation analysis to test the effects of independent variables on the dependent variable and the linear relationship between the variables, respectively. The different financial institutions that were considered in the study were selected using systematic random sampling. The researcher collected data from various sources, including the leading financial institutions in South Sudan. The Econometric Views (EViews) software was used for data analysis and management. The correlation matrix was estimated to check for severe correlation and the possibility of multicollinearity in the estimated model. The results showed that there was an inverse and statistically significant relationship between foreign exchange rate and the performance of financial institutions in South Sudan. In conclusion, the government can use macroeconomic variables to influence the performance of financial institutions and improve policy formulation and implementation. Keywords: Exchange Rate, Performance, Financial Institutions, South Sudan