Financialization is the process by which financial markets, financial institutions, and financial

elites have more sway on monetary and fiscal policy as well as economic outcomes. Global
or state components of financialization have an impact on the public finances and national
budget of South Africa. These are elements that could either have a good or negative impact
on the state's national budget.
Stock Market
 A free market economy includes the stock market. It enables investors to partake in a
company's financial success while also enabling businesses to raise capital by selling
stock shares and corporate bonds. As a result of encouraging local residents to invest
their savings and luring in foreign capital, this has a favorable impact on the SA
national budget.
Pros
 Stock markets drive the economic growth by encouraging domestic cotizens to invest
their savings and attract foreign investments.
 The stock market provides the potential to earn inflation beat returns.
Cons
 A significant and obvious risk involved in stock market investing is liquidity risk.
This occurs when a company, individual investor, or financial institution is unable to
pay back short-term loans. Due to a lack of bidders or an inefficient market, the
investor or corporation might be unable to sell the asset for cash without forfeiting
money and income.
 The market value of a corporation might also decrease due to subpar operational
performance in the market.

Foreign direct investment, merges and acquisitions, and the rising power of
transnational companies.
 They consist of huge businesses and investment banks that specialize in the issuance
and placement of securities, as well as mutual funds (investors), hedge funds, pension
funds, insurance companies, and the treasures of multinational corporations.
Pros
 Foreign investment enables economic growth, human capital development,
technology innovation and an increase in exports.
Cons
  Foreign investments can result to a hindrance of domestic investments, this means
that local companies start losing interest in investing in their domestic products. This
results to a decrease in economic growth and public finance.
 Foreign investment also result to negative exchange rates, higher costs, expropriation,
modern-day economic colonialism and poor performance.
Savings and investments on a world-scale
 The configuration of current account imbalances and the level of real interest rates are
both affected by changes in the world economy's saving and investing habits. This is
the outcome of monetary and fiscal policy decisions. 
The state to the rescue
 Every time a nation is in debt, the government has a duty to pay off that debt. As a
result, the government must adjust its budget to account for the state's debt. E.g
Eskom, FlySAfair
Pros
Cons
 This has resulted in South African being in debt (deficit) and unble to overcome their
expenses which could result in a surplus.
Taxes
South Africa has a residence-based system, which means residents are subject to taxation on
their worldwide income regardless of where they earned it, subject to some exclusions. Non-
residents are, nonetheless, subject to taxation on their South African-sourced income.
Pros
 Taxation can be used as an instrument to limit inflation, particularly demand-pull infla
tion, by raising various tax rates.
 Encourage not to save, since tax rates decrease a person's discretionary income, they
also decrease their capacity to save money. As a result, this money can't stay in just a
few hands and keeps moving.
 The government is able to pay out some of its expenditures through tax.
Cons
 Taxation lessens the ability to buy, high tax rates tend to lower an individual's
disposable income, which then lowers their purchasing power.
 Dicourage investments, investors will choose to invest in other states/nationals whose
tax rates are reasonable rather than in a particular state with a high tax rate on
company profits.