Can altcoins become viable alternatives to African fiat currencies?
International Journal of Development Issues
ISSN: 1446-8956
Article publication date: 16 August 2021
Issue publication date: 18 February 2022
Abstract
Purpose
The paper aims to examine the asymmetric response of three major altcoins to shocks in six African fiat currencies in a time-frequency space.
Design/methodology/approach
Data are for the period 10th August 2015 to 2nd February 2019 at a daily frequency. The authors capture the time and frequency information in the return series of the currencies using the ensemble empirical mode decomposition. The authors implemented quantile regression and quantile-in-quantile regression on the decomposed series to test the response of altcoins to both positive and negative shocks in the fiat currencies across time to see if the altcoins are viable alternatives to African fiat currencies.
Findings
The outcome of the study suggests that altcoins behave differently from African fiat currencies and are viable alternative digital currencies and good hedges for African fiat currencies from the medium-term.
Research limitations/implications
Policymakers in Africa and across the globe can follow this paper to mitigate currency crises by adopting altcoins as alternatives to fiat currencies. Forex traders can also mitigate trade risk by using altcoins to hedge dollar/African fiat currency exchange rate risk.
Originality/value
The research was conducted by the authors and has not been published in any journal.
Keywords
Acknowledgements
Disclosure statement.
• No potential conflict of interest was reported by the authors.
• This research did not receive any specific grant from funding agencies in the public, commercial or not-for-profit sectors.
Citation
Kumah, S.P. and Odei-Mensah, J. (2022), "Can altcoins become viable alternatives to African fiat currencies?", International Journal of Development Issues, Vol. 21 No. 1, pp. 24-53. https://doi.org/10.1108/IJDI-04-2021-0088
Publisher
:Emerald Publishing Limited
Copyright © 2021, Emerald Publishing Limited