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.

M.Com. (Economics) / Please refer to full text to view abstract

Thesis (M.Sc. Agriculture (Agricultural Economics) -- University of Limpopo, 2019 / Agriculture has long been argued to be the dominant sector of the South African economy. Despite the huge agricultural potential of the country, the agricultural sector is underperforming in Less Developing Countries (LDCs) to some extent because female small-scale farmers, who play a vital role in agriculture, encounter credit constraints because of their gender and this in turn reduce their productivity. Therefore, the gender gap in terms of access to credit indicates that there is a need to reassess the problem of credit access by small-scale farmers on the basis of gender. This study was carried out in the Greater Letaba Municipality (GLM) which is situated in the Mopani District of Limpopo Province, with the aim of analysing factors that influence formal credit access by both female and male small-scale farmers. Structured questionnaires were employed to collect the data for the analyses from 140 sampled small-scale farmers (70 males and 70 females) selected using stratified random sampling technique. The findings of the probit regression model discovered that gender, extension services, land ownership, age, collateral and farm size had a significant positive influence on small-scale farmers` access to formal credit in the GLM. Additionally, the findings further revealed that household size, farming experience, farm-income, marital status had an insignificant negative influence on the small-scale farmers` access to formal credit whereas education level had an insignificant positive influence on the small-scale farmers` access to formal credit. On average, male and female small-scale farmers with access to formal credit were 71 % and 29 %, respectively whereas the male and female small-scale farmers without access to formal credit were 35% and 65%, respectively. The female small-scale farmers` perceptions towards the credit system that were derived from the Principal Component Analysis (PCA) are as follows: (i) male smallscale farmers effortlessly get credit from banks contrasted with their female counterparts, (ii) small-scale farmers with more education and collateral tend to access formal credit than their counterparts and (iii) small-scale farmers who are nearest to iii the banks are more likely to access credit than small-scale farmers who are far away. Based on the study findings, a set of recommendations for achieving equitable formal credit access by male and female small-scale farmers were put forward. / National Research Fund (NRF)

Thesis submitted in fulfillment of the requirements for the degree of Master of Management in Finance & Investment In the Faculty of Commerce and Law Management Wits Business School at the University of the Witwatersrand, 2015 / Risk based pricing has been a topic of discussion since the 2008 financial crisis as a result of the on-selling of packaged sub-prime assets. This paper will highlight the importance of correctly assessing risk within the framework of consumer credit provision. We will begin with a brief overview of the South African unsecured lending market, look into the definition of risk based pricing and the impact it has had in the market and conclude the paper by using a model by Robert Phillips to calculate the interest rate to be offered to a customer. / AC2016

This study proposes a loyalty segmentation model for the South African men's retail credit fashion industry. Retailers operate in a highly competitive market where competitors strive for share-of-wallet of the same customer. The likely victor in this battle is the retailer who best understands customer needs, purchase behaviour and utilises this information to influence customer's spending patterns. The research method comprised a postal survey to randomly selected customers. The process included the construct of the loyalty model which comprised four input models, namely the Competitiveness, Brand experience, Referral and Credit appeal models as well as a number of customer demographics. The Desert scenario, where extreme conditions exist, is used as the analogy for the Segmentation model, with four macro segments (Desert, Oasis, Sand Storm, Rain clouds) being used to categorise respondents along two criteria, namely that of value and relative risk. Segment characteristics are used to segment the retailer's database. / Business Management / MCom (Business Management)

Thesis (MDF)--Stellenbosch University, 2012. / Small, medium and micro enterprises (SMEs) provide critical productivity and growth enhancing functions thereby contributing to a country’s gross domestic product and offering employment. Some of these small businesses however, face various challenges including restricted access to funding from private financial institutions including commercial banks. Banks are not readily disposed to extending credit to small businesses since they are perceived to be high risk, they lack collateral and the administrative costs associated with lending to them are high. Credit guarantee schemes such as the Khula Credit Guarantee Scheme (KCGS) are aimed at encouraging the flow of funds to small businesses through the sharing of risk between the lender, borrower and guarantor. Credit guarantee schemes have to be designed and implemented according to some international best practices but within a local context. This research report therefore, attempts to determine the effectiveness of the KCGS in terms of whether: • the KCGS is in line with best international principles and practices; • the scheme is meeting its objectives of lending to the targeted group; • the KCGS has generated the desired interest in lenders, and • the default rate amongst borrowers is within acceptable limits. The study finds that the KCGS has some features that are based on best international principles. But the scheme has not necessarily succeeded in lending to the targeted market, and default rates are very high. The study makes various recommendations, including the need for a comprehensive database of beneficiaries of the KCGS loan, providing non-financial support to beneficiaries, and the need to review the processing of claims.

A credit default swap is a contract that ensures protection against losses occurring due to a default event of an certain entity. It is crucial to know how default should be modelled for valuation or estimating of credit derivatives. In this dissertation, we first review the structural approach for modelling credit risk. The model is an approach for assessing the credit risk of a firm by typifying the firms equity as a European call option on its assets, with the strike price (or exercise price) being the promised debt repayment at the maturity. The model can be used to determine the probability that the firm will default (default probability) and the Credit Spread. We second concentrate on the valuation of credit derivatives, in particular the Credit Default Swap (CDS) when the hazard rate (or even of default) is modelled as the Vasicek-type model. The other objective is, by using South African credit spread data on defaultable bonds to estimate parameters on CIR and Vasicek-type Hazard rate models such as stochastic differential equation models of term structure. The parameters are estimated numerically by the Moment Method. / Thesis (M.Sc.)-University of KwaZulu-Natal, Durban, 2013.

The main objective of the study was to investigate the causes underlining small-farmers default on bank loan repayments in the North West Province. One hundred and sixty farmers were randomly selected to be part of the sample. Questionnaires were issued to both farmers and bank officials. Descriptive statistics, correlation and regression models were used to analyse the data. The overall results indicate that most of the small farmers are in the old age category (58 years on average) with very low educational level. This scenario poses a challenge to the stakeholders in agriculture specifically the succession plan to these elderly people when they leave agriculture due to retirement. It was revealed by the study that the farmers do not keep either financial or production records. The analysis shows that the small farmers lack skills in financial management therefore, they are unable to execute the prerequisite to modern farming which are literacy and numeracy as indicated by Woohall et. al.,( 1985). Most of the respondents have outstanding debt from Agribank yet they received loans from Landbank. Because of their low production and other many responsibilities, they are unable to repay loan instalments thus leading to loan default to their current financial supplier, which is Landbank. Lack of monitoring of loan funds was identified as one of the causes of the farmers Joan default. The analysis also indicates that the small farmers have access to finance but the major problem is lack of financial management skills, more involvement in household responsibilities, and lack of technical assistance from relevant stakeholders like extension officers and project managers from the bank or from the Department of Agriculture. Since the Land bank have no field officers to assist the farmers, it is recommended that the bank should have field officers to assist farmers in their business, especially with production, marketing, financial management and farm management Skills. The inability of the farmers to access good value markets for their products was identified as one of the problems, which led to loan default because the farmers are unable to market their products at the right time for good value in excess of their cost. It is recommended that financial institutions should assist their clients to access better markets for their products for better price which will in turn give them better income in order to repay their loans. / M.Sc. (Agric. Economics) North-West University, Mafikeng Campus, 2005

This study proposes a loyalty segmentation model for the South African men's retail credit fashion industry. Retailers operate in a highly competitive market where competitors strive for share-of-wallet of the same customer. The likely victor in this battle is the retailer who best understands customer needs, purchase behaviour and utilises this information to influence customer's spending patterns. The research method comprised a postal survey to randomly selected customers. The process included the construct of the loyalty model which comprised four input models, namely the Competitiveness, Brand experience, Referral and Credit appeal models as well as a number of customer demographics. The Desert scenario, where extreme conditions exist, is used as the analogy for the Segmentation model, with four macro segments (Desert, Oasis, Sand Storm, Rain clouds) being used to categorise respondents along two criteria, namely that of value and relative risk. Segment characteristics are used to segment the retailer's database. / Business Management / MCom (Business Management)

This study aims to investigate the relationship between private saving and investment for South Africa using a Vector Error Correction Framework. Saving and investment are considered to be important factors for sustainable economic growth in the country, particularly as these variables have been recorded at significantly lower levels than those of other developing nations. By examining the direction of causality between saving and investment, the most suitable policy measures can be used in stimulating either savings or investment, and as a result aggregate growth. The study found a positive two-way causality to exist between these two variables, proving that both saving and investment-led policies are necessary in raising saving and investment levels. With the inclusion of credit extension as the third variable used to remove any variable bias, the study not only found credit extension to Granger cause private saving, but the reverse relationship was found to be present as well. This relationship was however found to be negative, confirming that lower borrowing constraints may have a negative effect on saving levels. The negative relationship between credit supply and private saving (substitution effect) proves that credit supply will only yield a positive result for savings if channelled through investment expenditure.