South African Banks and the Unbanked: Progress and Prospects

Schoombee, Andrie

doi:10.1111/j.1813-6982.2004.tb00127.x

Cited by 10 publications

(8 citation statements)

References 5 publications

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“…This research supports the findings of Schoombee (2004) that the interest rates for micro-loans were generally exorbitant with a mean of 24 per cent per month for the 30 financial institutions. The results for overall finances costs (interest + charges) calculated in this research varied between 21 per cent and 27 per cent per month.…”

Section: Finance Costssupporting

confidence: 77%

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Debt financing the capital requirements of informal market traders

Schraader

Whittaker

McKay

2010

SAJEMS

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This paper describes a case study that was undertaken to determine whether formal sector personal debt financing might contribute to the funding of South African informal market traders. The case study was conducted at the Natalspruit informal market in Ekhurhuleni, Gauteng. Quantitative questionnaire surveys and a financial diaries project established that market traders in the market have capital requirements large enough to justify the use of formal sector debt financing, can generate sufficient operating profits to pay for formal sector debt financing and would be willing to utilise formal sector debt financing if given the opportunity. However, formal sector debt financing is most relevant to those informal market traders with the skills and motivation to utilise financing effectively and who are willing to inject more formality into their businesses.

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Section: Finance Costssupporting

confidence: 77%

“…What literature does exist points to an environment characterised by exorbitant interest rates (Schoombee, 2004). The National Credit Act (Republic of South Africa, 2005) legislates that interest rates on unsecured or developmental credit may be a maximum of 2.2 times the repo rate plus 20 per cent.…”

Section: Finance Costsmentioning

confidence: 99%

Debt financing the capital requirements of informal market traders

Schraader

Whittaker

McKay

2010

SAJEMS

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“…For this reason, the Exemption Notice of 1992 was replaced by the Exemption Notice of 1999, which extended the exemption amount to R10 000 for instalment credit agreements of less than three years. At the same time, government also established the Micro Finance Regulatory Council (MFRC) to regulate the micro-lending industry (Meagher, 2002;Schoombee, 2004).…”

Section: Regulation and Over-indebtednessmentioning

confidence: 99%

The threshold effects of household indebtedness on multidimensional poverty

Ntsalaze

Ikhide

2017

IJSE

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DeclarationBy submitting this dissertation electronically, I declare that the entirety of the work contained therein is my own, original work, that I am the sole author thereof (save to the extent explicitly otherwise stated), that reproduction and publication thereof by Stellenbosch University will not infringe any third party rights and that I have not previously in its entirety or in part submitted it for obtaining any qualification.This dissertation includes two published and one accepted but not yet published original papers in peer-reviewed international journals. The fourth paper representing chapter eight is ready for submission for peer review. The development and writing of the papers (published and unpublished) were the principal responsibility of myself and, for each of the cases where this is not the case, a declaration is included in the dissertation indicating the nature and extent of the contributions of co-authors. AbstractGlobal household indebtedness has reached unprecedented levels over the past few decades.The household sector has had to cope with significant losses in income and wealth as well as the burden of debt service since the beginning of the financial crisis. Research focus on this phenomenon, together with its social implications, has grown. This study uses the National Income Dynamics Study (NIDS) data to empirically investigate the effects of household debt on multidimensional poverty. This was achieved through four independent research papers meant to address different angles of the subject. Chapter 5 provides a snapshot of the prevalence of over-indebtedness, using various international indicators and the National Credit Regulator (NCR) indicator, and describes which households are over-indebted. A total of eight percent of South African households are overindebted, and 61.4 percent of those households are found in the lowest income category (R0 -R2 000), spending more than 45 percent of their household income on debt repayments, which is beyond levels that are considered sustainable. The alarming revelation is that, according to the unsecured debt indicator, 15.2 percent of households are over-indebted, while 11 percent of households are driven below the relative income poverty line after making debt repayments. Stellenbosch University https://scholar.sun.ac.za 3The racial distribution indicates that households headed by Africans are overrepresented (79%).Most over-indebted households are found amongst those who own their places of residence (78.6%), do not receive government grants (71.7%), are male (53.8%), and have an unemployed household head (53.5%).Chapter 6 examines the presence of thresholds in the debt-poverty nexus at micro level, i.e. the tipping point above which debt is associated with more multidimensional poverty. By applying the Generalised Additive Model (GAM) using regression splines, the study finds the existence of critical tipping points between household debt service-to-income ratio and multidimensional poverty along with other explanatory variables (age...

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“…Another exemption followed in 1999, in response to demand for larger loans, increasing the loan ceiling from R6,000 to R10,000 (Daniels, 2001a;Daniels, 2001b). This liberalisation led to strong growth in the microfinance market, largely in unsecured debt (Microfinance Regulatory Council, 2006;Hawkins, 2003;Schoombee, 2004). The Microfinance Regulatory Council, a body set up to regulate the microfinance industry, reports that in the 12 months ending in February 2006, microloan disbursements totalled R27.2bn, a 32% increase on the preceding 12 months (Microfinance Regulatory Council, 2006).…”

Section: Chapter 1: Introduction To the Research Problemmentioning

confidence: 99%

“…The banks that are doing well in the area of microlending make the most of information-based credit management (Schoombee, 2004). Most use application scorecards as the basis for decision making, as well as making use of credit bureau data for identifying clients to solicit with offers of new loans.…”

Section: Chapter 1: Introduction To the Research Problemmentioning

confidence: 99%