The earlier theories considered trade credit as a substitute for bank credit. Recent theories suggest that bank credit and trade credit can also be considered as two complementary sources of financing. By using South African panel data from 2007 to 2015, the study examines if the problem of financial inclusion in South Africa can be mitigated by utilising trade credit data. The empirical findings using trade credit at current period are consistent with the earlier theories of trade credit that trade credit and bank credit are substitutes, but the model was not robust to estimation techniques. The study also used the lagged trade credit as a variable of interest and found that it is positively related to bank credit. This means that the trade credit data from the previous period can facilitate access to bank credit. Therefore, the information from trade credit can serve as a signal about firms’ quality and thus facilitates access to bank finance. / Economics / M. Com (Economics)

In South Africa household debt has increased rapidly over the past few years, therefore illustrating the importance of analysing liability usage behaviour of individual members within the household. In order to comprehend the behaviour of South Africans regarding liability usages, this study provides insight into why individuals find it necessary to obtain liability products as well as to indicate whether liability products are used to address the financial needs for the purpose it was developed for. To achieve the aim of this study, it was firstly necessary to develop a theoretical framework for the process of selecting credit products when satisfying financial needs. Secondly, the characteristics and intended usage purposes of different credit products available in South Africa were discussed and a debt classification framework was developed. Finally, data obtained from the Finscope South Africa survey was analysed according to the developed frameworks following a combination of two approaches. Firstly, a qualitative approach was used to identify the different financial needs which are satisfied when using liabilities. The financial needs identified were classified according to Alderfer’s existence relatedness growth (ERG) theory and the factors that have an influence on liability usage. Secondly, a quantitative approach was followed to indicate which financial needs are fulfilled when using different credit products. The results of this study suggest that individuals do not use liabilities only for the purpose what the products were originally developed for. The findings clearly indicated that individuals mainly use liabilities to satisfy basic needs which are classified as existence needs according to Alderfer’s ERG theory. Based on the data analysis a variety of factors such as access to credit and certain demographic characteristics have an influence on liability usage behaviour of individuals. The results further show that individuals mainly use informal, unsecured, short-term loans when satisfying their financial needs which might indicate that South Africans are unable to access formal credit products. / Financial Accounting / M. Phil. (Accounting Science)

The objective of this research is to investigate the existence of structural changes in unsecured lending time series data and analyse the impact thereof on trends in consumer demand for unsecured credit spanning the years from 2008 to 2015. This is achieved by identifying dates when structural changes occurred over this period. The identified structural break date is linked to an influential economic event or monetary policy change that took place in South Africa of which the impact on three unsecured credit categories are analysed. Unsecured credit growth in South Africa has been subjected to intensive scrutiny since the inception of the National Credit Act (Act No. 34 of 2005) by various regulatory bodies. In 2012 the National Credit Regulator (NCR) commissioned a research study into examining the impact that the National Credit Act (Act No. 34 of 2005) has had on the consumer credit market. The empirical part of this study involved the gathering of time series data on unsecured loans approved, unsecured credit granted per income category and unsecured credit granted from the National Credit Regulator (NCR) database and performing descriptive and econometric analysis. The Zivot-Andrews (1992) and augmented Dickey-Fuller tests determined the break dates which were linked to a significant economic event while the one sample t-test of means compared average loan values before and after the break date. Results of the study indicate that the break dates determined coincided with economic events and monetary policy changes in South Africa, such as the collapse of African Bank, the implementation of the National Credit Amendment Act, prime interest rate movements and the introduction of a debt counselling program by the government. These events, coupled with stricter lending criteria and no further loans being granted to customers already more than three months in arrears, restrained the uptake of unsecured loans to lower and middle income groups. The introduction of new affordability criteria and increasing interest rates in 2014 further negatively impacted demand for unsecured loans. However, higher income earners had the advantage of being able to apply for higher loan amounts. Findings could be used by monetary policymakers and financial institutions to constantly monitor credit trends, improve credit assessment techniques and review lending criteria. / Business Management / M. Com. (Financial Management)

In South Africa household debt has increased rapidly over the past few years, therefore illustrating the importance of analysing liability usage behaviour of individual members within the household. In order to comprehend the behaviour of South Africans regarding liability usages, this study provides insight into why individuals find it necessary to obtain liability products as well as to indicate whether liability products are used to address the financial needs for the purpose it was developed for. To achieve the aim of this study, it was firstly necessary to develop a theoretical framework for the process of selecting credit products when satisfying financial needs. Secondly, the characteristics and intended usage purposes of different credit products available in South Africa were discussed and a debt classification framework was developed. Finally, data obtained from the Finscope South Africa survey was analysed according to the developed frameworks following a combination of two approaches. Firstly, a qualitative approach was used to identify the different financial needs which are satisfied when using liabilities. The financial needs identified were classified according to Alderfer’s existence relatedness growth (ERG) theory and the factors that have an influence on liability usage. Secondly, a quantitative approach was followed to indicate which financial needs are fulfilled when using different credit products. The results of this study suggest that individuals do not use liabilities only for the purpose what the products were originally developed for. The findings clearly indicated that individuals mainly use liabilities to satisfy basic needs which are classified as existence needs according to Alderfer’s ERG theory. Based on the data analysis a variety of factors such as access to credit and certain demographic characteristics have an influence on liability usage behaviour of individuals. The results further show that individuals mainly use informal, unsecured, short-term loans when satisfying their financial needs which might indicate that South Africans are unable to access formal credit products. / Financial Accounting / M. Phil. (Accounting Science)