Monetary policy transmission in South Africa: the prime rate-demand for credit phase
- Authors: Lehobo, Limakatso
- Date: 2006
- Subjects: South African Reserve Bank , Monetary policy -- South Africa , Banks and banking -- South Africa , Bank loans -- South Africa , Financial institutions -- South Africa , Finance -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:1128 , http://hdl.handle.net/10962/d1020850
- Description: A voluminous literature attempts to explain the various channels of the monetary policy transmission mechanism through which central banks ultimately achieve price stability. However, most research focuses on interest rate pass-through and the demand for money phase, while there is limited research on the demand for credit. This study endeavours to contribute to the understanding of this neglected phase of monetary policy transmission by exploring the response of the real demand for bank credit by the private sector to changes in the real prime rate from 1990:1 to 2004:4 in South Africa. Firstly, the behaviour of the real prime rate in relation to the repo rate is explored using graphical analysis. The study observes that an increase in the repo rate causes an increase in the real prime rate, such that there is always a margin of three or four percentage points between the two rates. Secondly, using secondary data, the Johansen methodology is used to determine the relationship between the demand for bank credit and its determinants (GDP, inflation, real prime rate and real yield on government bonds). Two co-integrating relationships are found. The Gaussian errors from one co-integrating vector are used to model the Vector Error Correction Model, which provides the short-run dynamics and the long-run results, through the use of Eviews 5 software. The results of the study show that while all other variables are negatively related to the demand for bank credit in the long-run, GDP has a positive influence. In the short-run, yield on government bonds and inflation coefficients depict a positive association, while the coefficients of real prime rate and GDP are negative. The error correction coefficient is -0.32, which implies that a 32% adjustment to equilibrium happens in the demand for bank credit in a quarter and that the complete adjustment takes about three quarters to complete. Thirdly, the generalised impulse responses results indicate that the impact on the real prime rate affects the demand for bank credit from the first quarter. The study concludes that the real prime rate has a negative impact on the demand for credit both in the short-run and long-run.
- Full Text:
- Date Issued: 2006
- Authors: Lehobo, Limakatso
- Date: 2006
- Subjects: South African Reserve Bank , Monetary policy -- South Africa , Banks and banking -- South Africa , Bank loans -- South Africa , Financial institutions -- South Africa , Finance -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:1128 , http://hdl.handle.net/10962/d1020850
- Description: A voluminous literature attempts to explain the various channels of the monetary policy transmission mechanism through which central banks ultimately achieve price stability. However, most research focuses on interest rate pass-through and the demand for money phase, while there is limited research on the demand for credit. This study endeavours to contribute to the understanding of this neglected phase of monetary policy transmission by exploring the response of the real demand for bank credit by the private sector to changes in the real prime rate from 1990:1 to 2004:4 in South Africa. Firstly, the behaviour of the real prime rate in relation to the repo rate is explored using graphical analysis. The study observes that an increase in the repo rate causes an increase in the real prime rate, such that there is always a margin of three or four percentage points between the two rates. Secondly, using secondary data, the Johansen methodology is used to determine the relationship between the demand for bank credit and its determinants (GDP, inflation, real prime rate and real yield on government bonds). Two co-integrating relationships are found. The Gaussian errors from one co-integrating vector are used to model the Vector Error Correction Model, which provides the short-run dynamics and the long-run results, through the use of Eviews 5 software. The results of the study show that while all other variables are negatively related to the demand for bank credit in the long-run, GDP has a positive influence. In the short-run, yield on government bonds and inflation coefficients depict a positive association, while the coefficients of real prime rate and GDP are negative. The error correction coefficient is -0.32, which implies that a 32% adjustment to equilibrium happens in the demand for bank credit in a quarter and that the complete adjustment takes about three quarters to complete. Thirdly, the generalised impulse responses results indicate that the impact on the real prime rate affects the demand for bank credit from the first quarter. The study concludes that the real prime rate has a negative impact on the demand for credit both in the short-run and long-run.
- Full Text:
- Date Issued: 2006
The influence of customer relationship management on the service quality of banks
- Authors: Rootman, Chantal
- Date: 2006
- Subjects: Customer relations -- South Africa , Banks and banking -- South Africa , Quality control
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:8980 , http://hdl.handle.net/10948/400 , Customer relations -- South Africa , Banks and banking -- South Africa , Quality control
- Description: Despite the extensive research undertaken in the subject area of services marketing, much is still unknown to service providers of specific services in terms of service delivery concepts. This study attempts to address this limitation. The study revolves around the customer relationship management and service quality of banks. Service firms, including banks, are vitally important to the economy of any country, as they contribute to its Gross Domestic Product (GDP) and employment rate. However, to survive in a complex, competitive business environment, service firms are required to focus on their clients’ needs. Specifically, banks can focus on their relationships with clients and levels of service quality. In order to establish the influence of selected variables on the customer relationship management (CRM) of banks and the influence of CRM on the service quality of banks, an empirical investigation was conducted. The aim of this study was to quantify significant relationships among selected variables; therefore the positivistic research paradigm was used. The sample consisted of banking clients in the Nelson Mandela Metropolitan area. The sample size was 290, with a response rate of 91.03%. The empirical investigation revealed that significant positive relationships exist between both the knowledgeability, and attitude, of bank employees and a bank’s CRM. These relationships imply that more extensive knowledgeability of bank employees and bank employees with more positive attitudes lead to improved, maintained relationships between a bank and its clients. In addition, the empirical investigation revealed that CRM positively influences the service quality of banks. This relationship implies that if a bank successfully maintains relationships with its clients, the bank’s level of perceived service quality would increase. Additionally, the empirical investigation has shown the relationship between a banking client’s age and the CRM of a bank. The higher the age of a banking client, the more that client considers the CRM of a bank to be important. There exists a relationship between a banking client’s education level and the perceived service quality of a bank. If a banking clients’ education level increases, the importance of their bank’s service quality decreases and, conversely, a banking client with a lower level of education regards the service quality level of a bank as more important than higher qualified clients. The study indicated that strategies to improve, specifically, the knowledgeability and attitude of bank employees can and should be implemented by banks in ways to positively influence their CRM and ultimately their service quality. In effect, this will increase client satisfaction and ensure client loyalty to the bank. Ultimately, this will contribute to the bank’s success, which will ensure economic stability and prosperity for a country.
- Full Text:
- Date Issued: 2006
- Authors: Rootman, Chantal
- Date: 2006
- Subjects: Customer relations -- South Africa , Banks and banking -- South Africa , Quality control
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:8980 , http://hdl.handle.net/10948/400 , Customer relations -- South Africa , Banks and banking -- South Africa , Quality control
- Description: Despite the extensive research undertaken in the subject area of services marketing, much is still unknown to service providers of specific services in terms of service delivery concepts. This study attempts to address this limitation. The study revolves around the customer relationship management and service quality of banks. Service firms, including banks, are vitally important to the economy of any country, as they contribute to its Gross Domestic Product (GDP) and employment rate. However, to survive in a complex, competitive business environment, service firms are required to focus on their clients’ needs. Specifically, banks can focus on their relationships with clients and levels of service quality. In order to establish the influence of selected variables on the customer relationship management (CRM) of banks and the influence of CRM on the service quality of banks, an empirical investigation was conducted. The aim of this study was to quantify significant relationships among selected variables; therefore the positivistic research paradigm was used. The sample consisted of banking clients in the Nelson Mandela Metropolitan area. The sample size was 290, with a response rate of 91.03%. The empirical investigation revealed that significant positive relationships exist between both the knowledgeability, and attitude, of bank employees and a bank’s CRM. These relationships imply that more extensive knowledgeability of bank employees and bank employees with more positive attitudes lead to improved, maintained relationships between a bank and its clients. In addition, the empirical investigation revealed that CRM positively influences the service quality of banks. This relationship implies that if a bank successfully maintains relationships with its clients, the bank’s level of perceived service quality would increase. Additionally, the empirical investigation has shown the relationship between a banking client’s age and the CRM of a bank. The higher the age of a banking client, the more that client considers the CRM of a bank to be important. There exists a relationship between a banking client’s education level and the perceived service quality of a bank. If a banking clients’ education level increases, the importance of their bank’s service quality decreases and, conversely, a banking client with a lower level of education regards the service quality level of a bank as more important than higher qualified clients. The study indicated that strategies to improve, specifically, the knowledgeability and attitude of bank employees can and should be implemented by banks in ways to positively influence their CRM and ultimately their service quality. In effect, this will increase client satisfaction and ensure client loyalty to the bank. Ultimately, this will contribute to the bank’s success, which will ensure economic stability and prosperity for a country.
- Full Text:
- Date Issued: 2006
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