South African banks' profits will wane

2015 ◽  
Keyword(s):  
South African ◽  
Banking Sector ◽  
Poor Performance ◽  
Technical Skills ◽  
Basel Iii ◽  
Content Type ◽  
Higher Education System ◽  
Labour Costs ◽  
Wage Negotiation ◽  
Big Four

Subject Outlook for South Africa's banking sector. Significance Insurance firm Discovery announced on September 10 that it will launch a full-service bank to compete with Standard Bank, Nedbank, Barclays Africa Group and FirstRand -- the 'big four' that dominate the sector. Despite a weak economy, South African banks have seen strong profit growth, according to a new PwC report. Impacts If the new mines minister fails to break the wage negotiation impasse, probable strikes could push the economy into recession. Banks' labour costs, already 58% of overall costs, will rise due to additional technical skills needed to implement Basel III requirements. Poor performance by the country's higher education system means qualified graduates will demand premium salaries.

scholarly journals Impact of the Basel III bank regulation on US agricultural lending

2020 ◽  
Vol 80 (3) ◽  
pp. 321-337 ◽  
Author(s):  
Kevin Nooree Kim ◽  
Ani L. Katchova
Keyword(s):  
Growth Rates ◽  
Banking Sector ◽  
Agricultural Sector ◽  
Global Financial Crisis ◽  
Detailed Examination ◽  
Capital Requirements ◽  
Basel Iii ◽  
Content Type ◽  
The Usa ◽  
The Impact

Purpose Following the recent global financial crisis, US regulatory agencies issued laws to implement the Basel III accords to ensure the resiliency of the US banking sector. Theories predict that enhanced regulations may alter credit issuance of the regulated banks due to increased capital requirements, but the direction of changes might not be straightforward especially with respect to the agricultural loans. A decrease in credit availability from banks might pose a serious problem for farmers who rely on bank credit especially during economic recessions. The paper aims to discuss these issues. Design/methodology/approach In this study, the impact of Basel III regulatory framework implementation on agricultural lending in the USA is examined. Using panel data of FDIC-insured banks from 2008 to 2017, the agricultural loan volume and growth rates are examined for agricultural banks and all US banks. Findings The results show that agricultural loan growth rates have slowed down, but the amount of agricultural loan volume issuance still remained positive. More detailed examination finds that regulated agricultural banks have decreased both the agricultural loan volume and their loan exposure to the agricultural sector, showing a possible sign of credit crunch. Originality/value This study examines whether the implementation of the Basel III regulation has resulted in changes in agricultural loan issuance by US banks as predicted by the lending channel theory.

South African SOE reforms unlikely under Zuma

2016 ◽  
Keyword(s):  
South African ◽  
Risk Perceptions ◽  
Content Type ◽  
Higher Education System ◽  
Macroeconomic Risk ◽  
Insurance Reform ◽  
Finance Minister ◽  
Health Insurance Reform ◽  
Railway Infrastructure ◽  
Patronage Politics

Subject Outlook for South Africa's state-owned enterprises. Significance On December 23, at Finance Minister Pravin Gordhan's instruction, South African Airways (SAA) concluded a deal with Airbus to lease five A330-300 aircraft. The deal overturns Chairperson Dudu Myeni's initial plan, which involved leasing the aircraft through local middlemen at far higher costs. However, this is a rare example of probity overcoming patronage politics, which has become the norm in state-owned enterprises (SOEs). Impacts Delays to railway infrastructure upgrades mean that new trains acquired by PRASA will be unusable in the medium term. Shortages of technical skills such as engineering, due to inadequacies in the higher education system, will add to SOE woes. The government's superficial funding proposal for its high-cost health insurance reform will worsen macroeconomic risk perceptions.

scholarly journals From the Big Five to the Big Four? Exploring extinction accounting for the rhinoceros

2018 ◽  
Vol 31 (2) ◽  
pp. 674-702 ◽  
Author(s):  
Jill Atkins ◽  
Warren Maroun ◽  
Barry Colin Atkins ◽  
Elisabetta Barone
Keyword(s):  
South African ◽  
Big Five ◽  
Design Methodology ◽  
Intrinsic Value ◽  
International Union ◽  
Content Type ◽  
Current State ◽  
Big Four ◽  
Practical Implications ◽  
Corporate Disclosures

Purpose The purpose of this paper is to explore a possible framework for extinction accounting which builds on but also extends significantly the existing GRI guidelines relating to species identified by the International Union for the Conservation of Nature Red List as under threat of extinction. Design/methodology/approach The paper analyses disclosures relating to rhinoceros conservation and protection produced by top South African-listed companies in order to assess the current state of “extinction accounting”. Following this analysis, the authors explore and discuss a potential framework for extinction accounting which may be used by companies to demonstrate their accountability for species and disclose the ways in which they are working alone, and in partnerships, to prevent species extinction. Findings Corporate disclosures relating to rhinoceros may be interpreted as emancipatory. The authors identify several disclosure themes dealing with rhinoceros in integrated and sustainability reports of large South African companies and on their websites. Contrary to initial expectations, there is evidence to suggest corporate awareness of the importance of addressing the risk of this species becoming extinct. Research limitations/implications The authors have relied on public corporate disclosures and would like to extend the work further to include interview data for a further paper. Practical implications An extinction accounting framework may be applied to corporate accounting and accountability for any species under threat of extinction. The framework may also be considered for use as a tool for institutional investors as well as NGO engagement and dialogue with stakeholder companies. Social implications The rhinoceros has, from the analysis, significant cultural, heritage, eco-tourism and intrinsic value. Developing and implementing an emancipatory extinction accounting framework to prevent extinction will have a substantial social and environmental impact. Originality/value This is the first attempt to the knowledge to explore accounting for extinction and a possible extinction accounting framework. It is also the first attempt to investigate accounting and accountability for the rhinoceros.

Does capital adequacy ratio influence risk-taking behaviour of conventional and Islamic banks differently? Empirical evidence from dual banking system of Malaysia

2020 ◽  
Vol 11 (9) ◽  
pp. 1989-2015
Author(s):  
Rafik Harkati ◽  
Syed Musa Alhabshi ◽  
Salina Kassim
Keyword(s):  
Empirical Evidence ◽  
Risk Taking ◽  
Commercial Banks ◽  
Banking Sector ◽  
Ordinary Least Squares ◽  
Capital Adequacy ◽  
Basel Iii ◽  
Islamic Banks ◽  
Content Type ◽  
Capital Adequacy Ratio

Purpose The purpose of this study is to investigate the influence of capital adequacy ratio (CAR) prescribed in Basel III on the risk-taking behaviour of Islamic and conventional commercial banks in Malaysia. It also investigates the claim that the risk-taking behaviour of Islamic banks (IBs) and conventional banks (CBs) managers is identically influenced by CAR. Design/methodology/approach Secondary data for all CBs operating in the Malaysian banking sector are gathered from FitchConnect database for the 2011–2017 period. Both dynamic ordinary least squares and generalised method of moments techniques are used to estimate a panel data of 43 commercial banks, namely, 17 IBs and 26 CBs. Findings The findings of this study lend support to the favourable influence of CAR set in Basel III accord on risk-taking behaviour of both types of banks. CBs appeared to be remarkably better off in terms of capital buffers. Evidence is established on the identicality of the risk-taking behaviour of IBs and CBs managers under CAR influence. Practical implications Even though a high CAR is observed to hamper risk-taking of banks, the findings may serve as a signal to regulators to be mindful of the implications of holding a high CAR. Similarly, managers may capitalise on the findings in terms of strategising for efficient use of the considerable capital buffers. Shareholders are also concerned about managers’ use of the considerable capital buffers. Originality/value This study is among a few studies that endeavoured to provide empirical evidence on the claim that IBs mimic the conduct of CBs in light of the influence of CAR prescribed in Basel III on risk-taking behaviour, particularly banks operating within the same banking environment.

To Basel or not to Basel? Banking crises and contagion

2015 ◽  
Vol 23 (3) ◽  
pp. 298-318 ◽  
Author(s):  
Aristeidis Samitas ◽  
Stathis Polyzos
Keyword(s):  
Banking Sector ◽  
Object Oriented ◽  
Banking Crises ◽  
Basel Iii ◽  
Financial Assets ◽  
Content Type ◽  
Economic Agents ◽  
Behavioural Simulation ◽  
The Stability ◽  
Use Of An Object

Purpose – The purpose of this paper is to propose an object-oriented model of financial simulations which aims to test the applicability and suitability of the proposed measures of Basel III with respect to the prevention of banking crises. Design/methodology/approach – The authors introduce an object-oriented model of financial simulations in the banking sector, namely, virtual banking (VBanking). The system is based on behavioural simulation of economic agents and allows for transactions between them, using various forms of financial assets. VBanking has been implemented as an automated stand-alone model, allowing for repetitive simulations under the same parameter sets, producing an efficient series of statistical data. Findings – Interpretation of the resulting data suggests that some of the criticism against the proposed measures is justified, as neither economic crises nor contagion are diminished under Basel III. At the same time, the authors’ findings support that the stability goal is met, at least in part. Research limitations/implications – The model encompasses a relatively small part of the banking sector, while the authors choose not to deal with the production part of the economy. However, these limitations do not hinder the validity and importance of the authors’ findings. Originality/value – The originality of this article lies in the use of an object-oriented behavioural model and in the resulting model application that is based on it. This enables the authors to run a series of simulations with different parameters, the results of which the authors can then compare. The authors’ findings can contribute to the authorities’ efforts to ameliorate the policies of Basel III.

South African Reserve Bank will reaffirm independence

2020 ◽  
Keyword(s):  
Interest Rates ◽  
South African ◽  
Banking Sector ◽  
Debt Relief ◽  
Quantitative Easing ◽  
Medium Term ◽  
Content Type ◽  
Reserve Bank

Significance Although the bank has acted on various fronts to support the economy, including a limited bond-buying programme, it continues to resist calls for full-blown quantitative easing (QE), and to fend off efforts which would threaten its independence. Impacts Lower interest rates will provide some relief for households and businesses but will not prevent a sharp economic contraction this year. The SARB’s efforts to make it easier for the banking sector to provide debt relief for customers will likely be extended. With most of SARB’s top leadership remaining in situ for 4-5 years, its independence and credibility should be secure over the medium term.

scholarly journals The productivity of GCC Islamic and conventional banks after Basel III announcement

2019 ◽  
Vol 10 (5) ◽  
pp. 770-792 ◽  
Author(s):  
Mohammad Alsharif ◽  
Annuar Md. Nassir ◽  
Fakarudin Kamarudin ◽  
M.A. Zariyawati
Keyword(s):  
Banking Sector ◽  
Productivity Index ◽  
Scale Efficiency ◽  
Productivity Change ◽  
Basel Iii ◽  
Islamic Banks ◽  
Content Type ◽  
Negative Effect ◽  
Conventional Banks ◽  
The Impact

Purpose This study aims to analyse Gulf Cooperation Council (GCC) Islamic and conventional banks’ productivity and to investigate the impact of Basel III on their productivity change. This study is conducted on 73 GCC banks (45 conventional and 28 Islamic) over the period of 2005-2015. Design/methodology/approach This study uses the data envelopment analysis-type Malmquist productivity change index and its component indexes to obtain a deep insight into the source of productivity change. Findings The results show that Islamic banks are less productive than their conventional counterparts. Also, the results indicate that Basel III accord has impeded the GCC banks’ productivity and this negative effect is larger on Islamic banks. However, there is scale efficiency progress in the past years that offsets the production frontier deterioration, which leads to stagnation in total productivity change for both banks. Originality/value This study differs from the previous GCC banks’ productivity studies in several ways. Firstly, it covers a recent period that includes major events such as the global crisis and focuses on the influence of Basel III accord on GCC banks’ productivity. Secondly, as opposed to the previous studies, this study will estimate the GCC banks’ productivity index and its components based on separate frontiers for Islamic and conventional banks that will ensure the homogeneity in the sample and the robustness of the results. Thirdly, this study uses a combination of parametric and non-parametric tests to confirm and check the robustness of the findings. Lastly, to the best of the knowledge of the authors, this is the first study that tries to analyse the GCC banking sector productivity around the new Basel III announcement.

Macroeconomic determinants of stock market development in South Africa

2019 ◽  
Vol 14 (2) ◽  
pp. 322-342 ◽  
Author(s):  
Sin-Yu Ho
Keyword(s):  
South Africa ◽  
Stock Market ◽  
South African ◽  
Banking Sector ◽  
Trade Openness ◽  
Market Development ◽  
The South ◽  
Content Type ◽  
Stock Market Development ◽  
Market Capitalisation

Purpose The purpose of this paper is to examine the macroeconomic determinants of stock market development in South Africa during the period 1975–2015. Specifically, it examines the impact of banking sector development, economic growth, inflation rate, real interest rate and trade openness on the development of the South African stock market. Design/methodology/approach The author employs autoregressive distributed lag bounds testing procedure that allows the author to empirically investigate both the short- and long-run relationships between the stock market development and its determinants in the context of South Africa. In addition, the author also conducts a sensitivity analysis by accounting for the presence of structural breaks in the underlying series to check for the robustness of the estimation. Findings This paper confirms the findings by other studies that banking sector development and economic growth promote stock market development, while inflation rate and real interest rate inhibit stock market development. In addition, this paper finds an interesting result in the fact that trade openness has a negative impact on stock market development, which is different from the findings of many other studies. Originality/value Currently, while the theoretical and empirical literature presents diverse views on the relationship between each determinant and stock market development, no study has focussed on the South African stock market. Given the significant role that the South African stock market plays in Africa as measured by its market capitalisation and market capitalisation ratio, there is a need for a better understanding of the macroeconomic factors influencing its development.

Basel III in India: a double-edged sword

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Noor Ulain Rizvi ◽  
Smita Kashiramka ◽  
Shveta Singh
Keyword(s):  
Banking Sector ◽  
Statistical Tests ◽  
Continuous Process ◽  
Basel Iii ◽  
Industrialized Countries ◽  
Holistic View ◽  
Content Type ◽  
Current State ◽  
Holistic Understanding ◽  
Tier 1

Purpose This paper aims to develop a holistic understanding of the state of implementation of the Basel III regulation in India. It offers essential insights related to its impact on the macroeconomy, non-performing assets, capital flows and modifications required for the Indian banking sector. Another central aspect of this study is the identification of challenges faced by bankers in implementing Basel III in India. Design/methodology/approach A survey was conducted with the help of a well-structured close-ended questionnaire. It was based on six themes identified after a comprehensive review of the literature. Seven experts validated the construction of the questionnaire. A total of 18 responses (42.8%) were received. Findings The findings substantiate the importance of Basel III regulations. Although high costs and roadblocks are involved in its implementation, yet, the benefits are notable. Banking experts sense the necessity to modify the Tier 1 ratio, risk-weights and ratings. It is felt that credit ratings will impact the capital and investment flows received by India. Research limitations/implications The number of responses limits the ability to conduct several statistical tests. Practical implications The findings support the industry’s view that Basel III focuses more on industrialized countries and that many emerging countries lack the technology and infrastructure to implement it. Originality/value Since the implementation of Basel, the norm is a continuous process; the findings provide vital insights to regulators and academicians focusing on the Indian banking sector about its current state to aid in developing a future roadmap. This paper delivers important values as follows: a holistic view of banking experts on Basel III in India, required modifications, its impact and future scope of research in this area.

Efficiency in China’s Banking Sector: A Comparative Analysis of Pre- and Post-Basel II Eras

2021 ◽  
pp. 2150010
Author(s):  
Sunil Mohanty ◽  
Hong-Jen Lin
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Banking Industry ◽  
Basel Ii ◽  
Capital Adequacy ◽  
Basel Iii ◽  
Profit Efficiency ◽  
Tier 1 ◽  
Big Four ◽  
Chinese Banking

This study investigates the effects of Basel II and Basel III capital adequacy rules and the regulatory framework adopted by Chinese banking regulators on the efficiency of the banking sector in China during the post-Basel II era (2007–2017) and compares the results with that of the pre-Basel II era (1996–2006). The study finds that both cost and profit efficiency of the banking industry have improved significantly from the pre-Basel II era (1996–2006) to the post-Basel II era (2007–2017). Subperiod analyses show that the risk-based capital ratio (Tier 1 capital ratio) is significantly positively associated with profit efficiency during both pre- and post-Basel II eras. Overall, the “Big Four” national banks and regional commercial banks signal higher profit efficiency during the post-Basel II era.

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