Measuring the Impact of the Global Financial Crisis on Efficiency and Productivity of the Banking System in South Africa

Maredza, Andrew; Ikhide, Sylvanus

doi:10.5901/mjss.2013.v4n6p553

Cited by 35 publications

(42 citation statements)

References 15 publications

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“…Banks in South Africa were not able to purchase these grouped loans because of tight banking regulations, and the implementation of the National Credit Act No. 34 of 2005 (NCA) (Maredza & Ikhide 2013). The NCA introduced prudent financial legislation shortly before the crisis (Gauteng Provincial Treasury 2012).…”

Section: Literature Study Procyclicalitymentioning

confidence: 99%

“…Secondly, the resilience of South African banks is linked directly to sound profitability, low leverage ratios, limited exposure to foreign assets and foreign funding as well as adequate levels of capital in times of crisis (Maredza & Ikhide 2013). In a period where many banks were declared bankrupt globally, all South African banks survived.…”

Section: Literature Study Procyclicalitymentioning

confidence: 99%

“…The European Union initiated fiscal relief (a sovereign bailout for Greece) indicating that capital levels were insufficient (Sorkin 2010). South Africa absorbed the effects of the crisis relatively well compared with other developing economy peers, due in large part to prudent risk management (Maredza & Ikhide 2013). The robustness of the South African economy is evident in the fact that all South African banks survived the crisis while many global banks required sovereign bailouts (National Treasury 2011).…”

Section: Introductionmentioning

confidence: 99%

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Contingent convertible bonds as countercyclical capital measures

Liebenberg

Vuuren

Heymans

2017

SAJEMS

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Background: The procyclical nature of capital models under the Basel II Accord has been widely criticised for exacerbating lending in economic expansions and restricting lending during economic contractions. These criticisms have led regulators to employ countercyclical measures in subsequent Basel accords. One of these measures, the countercyclical capital buffer (CCB), has been proposed as an effective countercyclical measure in expansionary periods as a deterrent to excessive lending through increased bank capital requirements.Aim: The effectiveness of the CCB during contractions is not obvious. Contingent convertible (CoCo) bonds – which are bond-like until triggered by a deterioration of a prescribed capital metric, at which point they convert into a form of equity – are explored as a supplementary countercyclical capital measure for such periods to establish whether or not they function effectively.Setting: The analysis is undertaken using global bank CoCo data, and then applied to South African banks.Methods: The Hodrick Prescott filter was applied to empirical historical data.Results: The CCB functions as a good countercyclical capital measure in times of economic expansion by absorbing losses and stabilising the capital base through equity issuance.Conclusion: The issuance of CoCo bonds – if their trigger mechanisms are designed correctly – may prove helpful to banks and the broader financial sector in times of economic contraction through the countercyclical capital properties that manifest through CoCo bonds under these economic conditions.

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Section: Literature Study Procyclicalitymentioning

confidence: 99%

Section: Literature Study Procyclicalitymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Contingent convertible bonds as countercyclical capital measures

Liebenberg

Vuuren

Heymans

2017

SAJEMS

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“…2 This performance was linked to sound profitability, low leverage ratios, limited exposure to foreign assets and foreign funding, as well as adequate levels of capital in times of crisis (Maredza & Ikhide, 2013). The South African Reserve Bank's (SARB) introduction of the National Credit Act (NCA) 35 of 2005 proved to be decisive and proactive in dampening the effects of the financial crisis on the South African economy (Kumbirai & Webb, 2010).…”

Section: Literature Studymentioning

confidence: 99%

Pricing contingent convertible bonds in African banks

Liebenberg

Vuuren

Heymans

2016

SAJEMS

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In times of financial distress, banks struggle to source additional capital from reluctant private investors. Sovereign bailouts prevent disruptive insolvencies, but distort bank incentives. Contingent convertible capital instruments (CoCos) -securities which possess a loss-absorbing mechanism in situations where the capital of the issuing bank reaches a level lower than a predefined level -offer a potential solution. Although gaining in popularity in developed economies, CoCo issuance in Africa is still in its infancy, possibly due to pricing complexity and ambiguity about conversion triggers. In this paper, the pricing of these instruments is investigated and the influence of local conditions (using data from three major African markets and an allAfrican index) on CoCo prices is explored. We find that the African milieu (high interest rates and equity volatility compared with the situation in developed markets) makes CoCos particularly attractive instruments for the simultaneous reduction of debt and the enhancement of capital. If CoCo issuance becomes a viable bank recapitalisation tool in Africa, these details will be valuable to future investors and issuers.

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“…Maredza et al (2013) measure the changes between; efficiency and productivity at the period of 2000-2010 by using the (DEA) methodology. He argues that productivity was the main factor that fell to 17% lesser during crisis compared to the period prior to a crisis.…”

Section: Introductionmentioning

confidence: 99%

Measuring the Performance of Jordanian Islamic Banks

Qasim¹,

Mohamad²,

Ibrahim

2017

jpag

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The banking sector is believed to be one of the driving forces of economic growth of many countries. Muslim jurists have realized the need to get the benefit of banking activities that adopts a lawful way with Islamic rule. Jordanian Islamic banks suffer from measure the financial performance using effective measurement tool based on various indicators. The main aim of this research is to analysis and ranks the performance levels of the Jordanian Islamic banks using suitable measurement methods. This study utilizes secondary data to measures the performance of three Jordanian Islamic banks (JIBFI, IIAB, and JDIB) over the period 2010-2013 by integrated tools; FRA, DEA, and MI. The significant results indicate that JDIB recorded the best performance rank based the three measurements tools, followed IIAB, and lowest rank is JIBFI. The contribution of this study is performance measurements of Jordanian Islamic banks based on the combination of FRA, DEA, and MI rather than ISSN 2161-7104 2017 utilize one measurement tool. Journal of Public Administration and Governance

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Measuring the Impact of the Global Financial Crisis on Efficiency and Productivity of the Banking System in South Africa

Abstract: Abstract

Cited by 35 publications

References 15 publications

Contingent convertible bonds as countercyclical capital measures

Contingent convertible bonds as countercyclical capital measures

Pricing contingent convertible bonds in African banks

Measuring the Performance of Jordanian Islamic Banks

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