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The credit risk management skills shortage in Nelson Mandela Bay MetropoleTeka, Babalwa January 2012 (has links)
Tito Mboweni (2011) said one of South Africa’s biggest tests is the overwhelming the skills shortage. He was echoing the views of Higher Education Minister Blade Nzimande who himself said “South Africa could not afford to have an economy "constrained by a severe lack of skills". There are numerous initiatives that having been undertaken by government in an attempt to solve the skills shortage problem. However, these initiatives are not aimed at the tertiary education system. The tertiary education system is the focus of this study as the author investigates how the NMMU Business School can play a significant role in addressing the skills shortage in the credit risk management sector. Following a literature review, surveys were completed by the NMMU Business School MBA students (ninety of them completed it) and personal interviews were conducted with three Provincial HR managers from South Africa’s “four big banks” in Nelson Mandela Bay (Nedbank, Standard Bank and ABSA). The study found that the skills shortage is indeed a problem. The study found that reasons including the legacy left by apartheid and students pursuing the wrong degrees were highlighted as some of the reason for this skills shortage. An opportunity for the NMMU Business School was identified to support the banking industry in addressing credit risk management skills shortage. The benefits include financial reward and more importantly an opportunity to differentiate the Business School and the courses offered at the school from the rest. Some of the recommendations included sourcing of the best practices from institutions like the Millpark Business School on effective partnering with the banking industry as well as a proactive approach to be adopted by the banking industry in terms of lobbying support from other potential role players for example but not limited to, student bodies, BankSeta and the smaller banks in the industry.
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Determinants of credit risk mitigation in lending to Black Economic Empowerment (BEE) companies, from a banker's perspective / A Banker's perspective on the determinants of credit risk mitigation in lending to Black Economic Empowerment (BEE) companiesMeyer, Petrus Gerhardus 08 May 2009 (has links)
Credit risk mitigation that can be applied by commercial banks in assessing the lending decision /credit risk when advances and equity investments are considered for BEE classified companies. / A research report presented to the Graduate School of Business Leadership, University of South Africa / The previous political dispensation limited black people’s participation in the South
African economy. Poor credit records, lack of training, resulting in skills and capacity
gaps further limited entry into the lending market. These aspects are considered the
main limitations in obtaining finance for the Small, Medium and Micro Enterprises
(SMMEs).
This research report focuses on how credit risk can be mitigated by commercial banks
in lending to Black Economic Empowerment (BEE) companies in the medium to large
market. Exploratory research was conducted using various methods to achieve
methodological triangulation. These methods consisted of a literature review,
interviewing experts in the field and case studies. A qualitative research approach was
followed. It was found that the lack of own contribution and security were still prevalent
in the medium to large market, but the quality of management (little training and skills)
was deemed not to be a limitation as suitable credit risk mitigants were identified. No
credit risk mitigants were identified to mitigate poor credit records. It is postulated that
by adopting and applying the identified credit risk mitigants, commercial banks can
increase their success rate in lending to BEE companies. It will further assist in the
transformation of black people and compliance with the Financial Services Charter.
It is recommended that a similar study be conducted in the agriculture, hunting,
forestry and fishing industry. The reasons why BEE companies applications are
declined could also be investigated. Further studies could also explore other external
factors such as economical, legal and social that could have an influence on the
funding of BEE companies.
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An analysis of the risk-return relationship in the primary agriculutral sector in the Western Cape from a commercial bank's perspectiveBenade, Jean 03 1900 (has links)
Thesis (MBA (Business Management))--University of Stellenbosch, 2009. / ENGLISH ABSTRACT: The research report investigates the risk/return relationship in the primary agricultural sector in the
Western Cape from a commercial bank's perspective. The study investigated the correlation
between credit risk and return within a randomly selected portfolio of agricultural borrowers.
Different risk categories were investigated to detennine which category correlates best with return.
The effect of below prime and above prime pricing on return was also investigated.
The study was conducted in the context of the turmoil in financial markets since the beginning of
2008, caused by excessive credit risks. This has led to the need for better regulation in the financial
services industry and better pricing decisions. Factors supporting this need for better regulation
include securitisation of debt, consolidation, globalisation and the systemic risk that banks impose
on the economy. The Basel Capital Accord introduced new regulatory requirements for the banking
industry to ensure more effective management of credit risk. Risk management processes in
agriculture are also subject to the requirements of this accord.
The agricultural sector is characterised by unpredictable climatological conditions, poor
governmental support, low profitability, overcapitalisation and price volatility, which cause this
sector to be especially exposed to credit risk. The credit risk of borrowers within the case study
bank was measured in tenns of a default grade using a behavioural risk rating model. Risk ratings
are used for profitability analysis, risk management and regulatory reporting. These ratings are
assigned during the annual review process, when borrowers are exposed to a business viability
assessment.
Banks incur risk costs when accommodating a borrower's credit risk, which has a negative effect on
the return that the borrower generates for the bank. This emphasises the importance of correlation
between credit risk and pricing and by implication return for sustainable profit margins. The
research results indicated that no correlation exists between credit risk and pricing. This lack of
correlation can be attributed to eontracrual agreements, relationship banking, technological
constraints, asset growth, price sensitivity in the agricultural sector and the nature of the risks in
agriculture.
The study also found that a negative correlation exists between credit risk and return. This can be
attributed to the fact that the higher the credit risk, the more economic capital is required to support
this risk and the more it costs. This implies a lower return on capital. It is recommended that the
risk/return relationship should be improved by reducing credit risk, increasing non-interest income,
ensuring that new borrowers are priced adequately, differentiating the existing portfolio in terms of
value and improving the negotiating skills of bankers. No meaningful conclusion could be drawn with regard to the effect that below prime and above prime pricing have on return. / AFRIKAANSE OPSOMMING: Die studieverslag ondersoek die verwantskap tussen risiko en opbrengs in die primere
landbousektor in die Wes-Kaap vanuit die perspektief van 'n kommersiele bank. Dit ondersoek die
korrelasie tussen kredietrisiko en opbrengs in 'n ewekansige steekproef van landboukliente.
Verskillende risikokategoriee is ondersoek om te bepaal watter kategorie die beste korrelasie tussen
risiko en opbrengs verteenwoordig. Die invloed van beprysing onder en bo prima op opbrengskoers
word ook ondersoek.
Die studie is gedoen in die konteks van die krisis in die finansiele markle sedert die begin van 2008,
wat veroorsaak is deur oornatige kredietrisiko. Dit het die behoefte aan beter regulering in die
finansiiHedienste-industrie asook beter beprysingsbesluite laat ontstaan. Faktore wat hierdie
behoefte aan beter regulering ondersteun, sluit in die verhandelbaarheid van krediet, konsolidasie,
globalisasie en die sistemiese risiko wat banke vir die ekonomie inhou. Die Baselooreenkoms het
nuwe regulatoriese vereistes aan die bankindustrie gesteil om meer effektiewe bestuur van
kredietrisiko te verseker. Risikobestuursprosesse in die landbou is ook onderhewig aan die vereistes
van die Baselooreenkoms.
Die landbousektor word gekenmerk deur onvoorspelbare klimatologiese toestande, swak
regeringsondersteuning, lae winsgewendheid, oorkapitalisering en prysskommelinge, wat
veroorsaak dat hierdie sektor buitengewoon blootgestel is aan kredietrisiko. Die kredietrisiko van
die kliente van die gevallestudiebank is gemeet volgens 'n waarskynlikheidsgradering wat verkry
word vanaf 'n risikomodel wat op gedragspatrone gebaseer is. Risikograderings word gebruik vir
winsgewendheidsontledings, risikobestuur en regulatoriese verslaggewing. Dit word tydens die
jaarlikse hersieningsproses toegeken, wanneer kliente aan 'n lewensvatbaarheidstudie blootgestel
word.
Banke gaan risikokostes aan om die kredietrisiko van kliente te akkommodeer, wat 'n negatiewe
uitwerking het op die opbrengs wat daardie klient vir die bank genereer. Dit beklemtoon die
belangrikheid van korrelasie tussen kredietrisiko en beprysing en by implikasie opbrengs vir
volhoubare winsgrense. Die navorsingsresultate toon dat daar geen korrelasie tussen kredietrisiko
en beprysing bestaan nie. Hierdie gebrek aan korrelasie kan toegeskryf word aan leningskontrakte,
verhoudingsbankwese, tegnologiese beperkings, bategroei, pryssensitiwiteit in die landbousektor en
die aard van die risiko's in die landbou.
Die studie het ook bevind dat daar 'n negatiewe korrelasie is tussen kredietrisiko en opbrengs. Dit
kan toegeskryf word aan die feit dat hoe hoer kredietrisiko is, hoe meer ekonomiese kapitaal vereis
gaan word om hierdie risiko te ondersteun en hoe hoer gaan die risikokostes wees. Dit impliseer 'n
laer opbrengs op kapitaal. Om die verwantskap tussen risiko en opbrengs te verbeter, word
aanbeveel dat kredietrisiko verminder word, nie-rente-inkomste verhoog word, nuwe kliente korrek
beprys word, differensiasie van die bestaande portefeulje plaasvind in terme van waardetoevoeging
en die onderhandelingsvermoe van bankiere verbeter word. Geen betekenisvolle gevolgtrekking
kon gemaak word aangaande die effek wat beprysing onder en bo prima op die opbrengskoers het
nie.
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Determinants of credit risk mitigation in lending to Black Economic Empowerment (BEE) companies, from a banker's perspective / A Banker's perspective on the determinants of credit risk mitigation in lending to Black Economic Empowerment (BEE) companiesMeyer, Petrus Gerhardus 08 May 2009 (has links)
Credit risk mitigation that can be applied by commercial banks in assessing the lending decision /credit risk when advances and equity investments are considered for BEE classified companies. / A research report presented to the Graduate School of Business Leadership, University of South Africa / The previous political dispensation limited black people’s participation in the South
African economy. Poor credit records, lack of training, resulting in skills and capacity
gaps further limited entry into the lending market. These aspects are considered the
main limitations in obtaining finance for the Small, Medium and Micro Enterprises
(SMMEs).
This research report focuses on how credit risk can be mitigated by commercial banks
in lending to Black Economic Empowerment (BEE) companies in the medium to large
market. Exploratory research was conducted using various methods to achieve
methodological triangulation. These methods consisted of a literature review,
interviewing experts in the field and case studies. A qualitative research approach was
followed. It was found that the lack of own contribution and security were still prevalent
in the medium to large market, but the quality of management (little training and skills)
was deemed not to be a limitation as suitable credit risk mitigants were identified. No
credit risk mitigants were identified to mitigate poor credit records. It is postulated that
by adopting and applying the identified credit risk mitigants, commercial banks can
increase their success rate in lending to BEE companies. It will further assist in the
transformation of black people and compliance with the Financial Services Charter.
It is recommended that a similar study be conducted in the agriculture, hunting,
forestry and fishing industry. The reasons why BEE companies applications are
declined could also be investigated. Further studies could also explore other external
factors such as economical, legal and social that could have an influence on the
funding of BEE companies.
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Critical success factors for the implementation of an operational risk management system for South African financial services organisationsGibson, Michael David 02 1900 (has links)
Operational risk has become an increasingly important topic within financial institutions of late,
resulting in an increased spend by financial service organisations on operational risk management
solutions. While this move is positive, evidence has shown that information technology
implementations have tended to have low rates of success. Research highlighted that a series of
defined critical success factors could reduce the risk of implementation failure. Investigations into
the literature revealed that no critical success factors had been defined for the implementation of
an operational risk management system.
Through a literature study, a list of 29 critical success factors was identified. To confirm these
factors, a questionnaire was developed. The questionnaire was distributed to an identified target
audience within the South African financial services community. Reponses to the questionnaire
revealed that 27 of the 29 critical success factors were deemed important and critical to the
implementation of an operational risk management system. / Business Management / M. Com. (Business Management)
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The impact of the National. Credit Act (NCA) on risk in the South African banking system10 June 2014 (has links)
M.Phil. (Economics) / There has been increasing focus on banking system stability worldwide, particularly due to the recent financial crisis experienced and the resultant adverse economic effects. In the case of a developing country like South Africa (SA), the stability of the banking system is even more important as it is crucial for the achievement of the country’s development goals. Credit extension is also a core component for facilitating economic and social development in the country. The downside risk attached to credit extension is that once it reaches a point of being excessive it can have a destabilising effect on the banking system and the economy. SA has experienced a rapid increase in credit extension since 2001, which prompted the implementation of the National Credit Act (NCA), with the intention of regulating the credit industry and improving the practices therein. More recently, further concerns have been raised by regulatory authorities around the possibility of an asset bubble in the SA economy as a result of the level of unsecured credit extended in the country. The objective of this study therefore is to investigate the impact of the NCA on risk, both credit and systemic, in the banking system. This is important, as investigating and understanding the impact of credit controls, like the NCA, on risk in the banking system is critical to supporting the SA development agenda. The findings of this study show that the NCA has been successful in reducing credit risk in the banking system, even though this was by default and not through the stated intention of the Act. This was achieved through the introduction of the affordability requirement into the credit assessment process. This study highlights however, that there are still areas of improvement which can be made to the NCA to increase its effectiveness in preventing excessive credit extension.
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Critical success factors for the implementation of an operational risk management system for South African financial services organisationsGibson, Michael David 29 February 2012 (has links)
Operational risk has become an increasingly important topic within financial institutions of late,
resulting in an increased spend by financial service organisations on operational risk management
solutions. While this move is positive, evidence has shown that information technology
implementations have tended to have low rates of success. Research highlighted that a series of
defined critical success factors could reduce the risk of implementation failure. Investigations into
the literature revealed that no critical success factors had been defined for the implementation of
an operational risk management system.
Through a literature study, a list of 29 critical success factors was identified. To confirm these
factors, a questionnaire was developed. The questionnaire was distributed to an identified target
audience within the South African financial services community. Reponses to the questionnaire
revealed that 27 of the 29 critical success factors were deemed important and critical to the
implementation of an operational risk management system. / Business Management / M. Com. (Business Management)
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The ethical focal point of moral symmetry – a heuristic to analyse risk culture and misconduct in banking: Demonstrated on three recent misconduct casesKirner, Benedikt 12 May 2021 (has links)
Many recent scandals in banking highlight the importance and challenges of risk governance due to non-financial risk issues such as misconduct and failed risk cultures of financial corporations.
The study of risk culture and misconduct in banking requires addressing questions on corporate governance beyond compliance; next to the empirical level, it is important to focus fundamentally on normative aspects, such as ethical norms and values. The heuristic of the ethical focal point of moral symmetry is developed and used to unravel these complex culture and conduct issues on both the normative and empirical level to differentiate good conduct from misconduct in the banking
industry, and to guide leaders and risk-takers in decision-making. Based on three case studies on recent banking scandals, the following main drivers of risk culture and misconduct issues in banking were derived: (i) bad leadership, (ii) decoupling of actions and values, and (iii) ignorance of risk policies due to the complexity and ambiguity of the banking business.
Banks are requested to internalize a heuristic such as the ethical focal point of moral symmetry to overcome the issues of misconduct and its spill-over effects on risk-taking and risk culture in the banking industry.
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Determinants of bank profitability : an empirical study of South African banksKana, Kiza Michel 01 1900 (has links)
The role that banks as key intermediaries play in the modern economy activities is unquestionable, it is admitted that banks remain one of the key financial intermediaries that provide a variety of services in the economy of every state. However, not all financial intermediaries have a significant impact on modern economies, only a stable and profitable banking sector can adequately play the role of financial intermediary in economy. The bank, as an intermediary in the modern economy must be profitable, and this profitability depends on a number of factors that are referred to in this study as determinants of bank profitability.
The effect of internal and external determinants of the bank profitability in South Africa is the main focus of this study. It utilized annual time series internal and external data for the period 2001 to 2013.
Quantitative approach methodology using secondary data and panel data technique to measure the impact of the determinants was used in the study. The sample consists of nine banks, followed for 12 years and sampled annually.
The results for bank-specific consist of four statistically significant variables such as bank size, non-interest income and non-interest expense and credit risk and four non-significant variables (equity capital, loan, saving deposit, fixe term deposit) also the industry-specific consist only one significant variable (market concentration) while macro-economic determinants consist of three non-significant variables (economic growth, inflation, and lending interest rate).
In conclusion, the empirical result shows that the bank specific factors are directly controlled by the Management thereby it has a positive correlation to the bank profitability while the industry specific (market concentration) also positively affects the bank profitability. However, the macroeconomic variables which are beyond the scope of management control were non-significant to profitability but show positive sign. Therefore, the variables which are significant affect positively the bank profitability, and the non-significant variables affect the bank profitability negatively. The findings were consistent with mixed results found in prior literature. / Business Management / M. Com. (Business Management)
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Towards a framework to address governance requirements of IT projects in the South African banking industryAnup, Charlene 11 1900 (has links)
Project success is vitally important for companies to execute and achieve their strate-gies, as well as carry out their visions. Today, more than ever before, companies oper-ate under tremendous strain to deliver results rapidly and, at the same time, remain viable and adaptable.
Many organisations face multiple constraints in the process of implementing successful governance structures, especially where meaningful information technology (IT) deals are involved. Every organisation is confronted by problems exclusive to itself as each organization’s ecological, political, geographical, economic and social issues are unique. Research has indicated that IT projects are likely to fail where governance is lacking due to organizational limitations. Each of the mentioned challenges is capable of giving rise to difficulties that make the provision of effectual governance impossible, or challenging.
Investments by financial institutions in South Africa in IT projects can conservatively be estimated at billions of rands. Given such colossal investment amounts, there is concern as to why there is still a lack of cooperation between various banking institutions in developing unified standards and procedures which result in successful management of IT projects. The unified standards would ensure that the investments in IT generate business value and mitigate the risks associated with IT, an integral part of the overall business delivery. IT governance is an integral part of corporate governance and en-sures that IT goals are met, and attendant risks are mitigated. IT governance powers ensures alignment between IT investment and programme delivery, and must justly measure accomplishments.
This study was undertaken to evaluate and establish the reasons why IT project man-agement and IT regulatory governance fail within the South African banking industry. The objectives of the study were to find ways of addressing the way in which IT project management and regulatory governance are implemented so as to address project fail-ures. Another objective was to recommend frameworks which would usher in positive impacts on IT project implementation and develop effective IT regulatory standards for the South African banking sector.
The findings of the study reflected that IT projects should be directed from the very top of organisations. The boards of directors and senior management should take owner-ship of IT projects and governance issues. The findings also revealed that there is a need for supervision by the boards of directors. This ensures that investments made in IT systems produce reasonable returns for the institutions. Regular checks of IT systems and governance compliance are essential to ensure enforcement. The research results were explained and equated to the studied information. / School of Computing / M. Tech. (Information Technology)
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