- Title
- The relationship between financial crises and South African bank lending activities
- Creator
- Madikizela, Mfundo
- Subject
- South African Reserve Bank Global Financial Crisis, 2008-2009 South Africa -- Economic conditions
- Date
- 2016
- Type
- Thesis
- Type
- Masters
- Type
- MCom
- Identifier
- http://hdl.handle.net/10353/15398
- Identifier
- vital:40404
- Description
- Financial assets, and particularly fiat money, play a critical role in the prosperity of an economy. Its health therefore becomes the cornerstone of an economy, as asserted by modern financial intermediation theory. Fundamentally, as established by literature, crises affect bank balance sheets and subsequently banks’ ability to provide credit, thereby restricting investment, capital and asset growth, aggregate output, and eventually national income. This study conclusively establishes the relationship between financial crises and the South African bank lending activities. It describes this relationship, concluding that crises and bank lending have a negative short run relationship and positive long run relationship. The study gives a brief background of recent crises that were experienced by different economies in the world. The study uses South African quarterly data for the period 1996 to 2015, where it employs a VECM model that gives empirics to the effect that lending is indeed negatively affected by financial crises, but only in the short run. This is due to the South African Reserve Bank, through its monetary policy, cushioning the banking sector against the detrimental effects of economic distress. The study recommends that given the indebtedness of South Africa relative to GDP growth, to avoid credit downgrades and disinvestment in the long run, government should focus on improving GDP growth rather than debt; and should establish a policy framework that centralises operational transactions in order to reduce the effect of crises on real output.
- Format
- 72 leaves
- Format
- Publisher
- University of Fort Hare
- Publisher
- Faculty of Management and Commerce
- Language
- English
- Rights
- University of Fort Hare
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| Thumbnail | File | Description | Size | Format | |||
|---|---|---|---|---|---|---|---|
| View Details Download | SOURCE1 | Mfundo Madikizela Final version Dissertation.pdf | 733 KB | Adobe Acrobat PDF | View Details Download |