Submitted in fulfilment of the requirements of the Masters of Technology degree in Cost and Management Accounting, Durban University of Technology, Durban, South Africa, 2015. / The National Credit Act No. 34 of 2005 (NCA) was introduced by the South African government mainly to bring about accessibility to credit markets, protect consumers from malpractices and market abuses by credit providers and reduce consumer over indebtedness. As a result, credit providers are compelled to apply stringent rules and regulations when assessing a credit consumer’s affordability prior to granting home loans. This study aims at investigating the impact of the NCA on the affordability of home loans within the Pinetown metropolitan area. The literature review presents an overall view of affordability of home loans in developed and emerging countries and also provides an in-depth explanation of factors that affect affordability of home loans in South Africa. The predominant factors, amongst others that hinder the housing market, are: an increase in house prices; elevated interest rates and household debt which include inflation, transportation cost and low wage increase. A mixed methods approach was utilized for the research, analyzing both quantitative and qualitative data. Respondents (home loan borrowers) completed a questionnaire by indicating if assessments were conducted in terms of their affordability prior to the approval of their home loan and their view on the impact that the NCA had on their home loan. The data suggested strongly that credit providers had conducted proper credit and affordability assessments prior to granting home loans and that most home loan borrowers’ level of debt had remained stable since acquiring their home loans as they continue to meet their debts. An overall analysis revealed that the application of the NCA had a positive impact on the affordability of home loans in the research area and that compliance with NCA, when granting credit, resulted in the reduction of reckless lending, a decline in the level of consumer indebtedness and a reduction in payment default.

Thesis (MBA)--Stellenbosch University, 2006. / ENGLISH ABSTRACT: This study shows that a close relationship exists between the South African wine industry and South African financial institutions. Research indicated a need to understand the characteristics and complexity of the wine industry, as well as that of credit assessment. This is important for both industries to further develop and strengthen their relationships. SA WIS provides statistics about various aspects of the South African wine industry. The wine industry is characterised by a fragmented basis. To strategically focus the industry, the South African Wine and Brandy Company (SAWB) was established in 2002. In the application for finance it is important for the applicant to know how credit is evaluated by financial institutions, and which aspects are of importance in the application. One cannot predict the future. The credit assessor therefore bases his credit decision on historical financial data, with the assumption that the trend will continue unless there are indications to the contrary. A specific wine industry credit application and evaluation process is discussed in the study. The final decision is only as good as the analysis, and the analysis is only as good as the information gathered. This study thus provides evidence that with a better understanding of the South African wine industry, financial institutions will be able to assess credit risks better. Similarly, the wine industry will benefit by a better understanding of credit assessment when applying for finance. A detail SWOT analysis was done on this industry. A summary was done of the most important finance needs of the South Afican wine industry, compared to the financial products offered by the South African banking industry and the information required to do the credit assessment. The additional information that the wine industry can supply to help the assessor to assess the application, is also listed. The study closes with proposals to the South African wine and banking industries on what to implement, in an effort to achieve a better relationship. / AFRIKAANSE OPSOMMING: Die studie toon dat 'n verwantskap bestaan tussen die Suid-Afrikaanse wynindustrie en Suid-Afrikaanse finansiele instellings. Navorsing toon aan dat daar 'n behoefte bestaan om die karaktereienskappe en kompleksiteit van die wynindustrie te verstaan, sowel as die van krediet keuring. 'n Beter verstandhouding is nodig om die twee industriee se verwantskap te versterk. SAWIS verskaf statistieke oor 'n verskeidenheid van die wynindustrie se aktiwiteite. Die wynindustrie het 'n gefragmenteerde basis. Die Suid-Afrikaanse Wyn en Brandewyn Maatskappy (SAWB) is in 2002 gestig, juis ten doel om die bedryf strategies te fokus. Dit is belangrik vir 'n aansoeker van krediet om te verstaan hoe die finansiele instelling kredietaansoeke evalueer, asook watter aspekte belangrik is om aan te spreek in 'n kredietaansoek. Die toekoms kan nie met sekerheid bepaal word nie. Die kredietkeurder baseer dus sy kredietkeuring op historiese data, met die aanname dat die tendens sal aanhou, tensy daar aanduidings is van die teendeel. 'n Spesifieke wynindustrie kredietaansoek en evaluasieproses word bespreek in die studie. Die finale krediet besluit is slegs soos goed soos die analise en die analise op sy beurt is weer net so goed soos die inligting wat versamel is. Die studie bewys dus dat met 'n beter begrip van die Suid-Afrikaanse wynindustrie, finansiele instellings 'n beter kredietanalise evaluasie sal kan doen. Terselfdertyd sal die wynindustrie bevoordeel word deur beter te verstaan hoe kredietaansoeke geevalueer word wanneer vir finansiering aansoek gedoen word. 'n Detail SWOT-analise is op die bedryf gedoen. 'n Opsomming word gedoen van die mees algemene finansieringsbehoeftes in die wynbedryf, gemeet teenoor die finansiele produkte aangebied en inligting vereis deur die finansiele instellings. Addisionele inligting wat die wynbedryf kan bied ten einde die kredietkeurder te help om die aansoek beter te kan evalueer, word ook gelys. Die studie sluit af met voorstelle aan die Suid Afrikaanse wyn- en bank industriee wat geimplimenteer kan word teneinde 'n beter verhouding te bewerkstellig.

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)

The potential of small and medium enterprises (SMEs) in promoting economic growth in both developed and developing countries is widely accepted and documented by both scholars and policy makers. Particularly lacking are studies on the evidence in support of the importance of credit rationing to the sustainability of SMEs in an emerging economy like South Africa’s. This specific problem, especially in the developing countries, has been identified as the major bottleneck in realising socio-economic potentials of SMEs in those countries. However, one of the major ways of addressing the challenge of inadequate funding that exists within the SME sector is the use of bank credit. This study was therefore undertaken to explore the role of commercial banks in the provision of credit to the SMEs in South Africa. This study focuses on the issue of the relationship between the banking industry and SMEs. In particular, the problem of credit rationing of, and discrimination against SMEs by commercial banks was investigated. Because credit rationing and finance gaps can stem from imperfections on either supply-side (banks), or demand-side (SMEs), or both, the intention of the study was to examine both of these variables in order to uncover the implications of their relationships. The empirical analysis is based on survey data collected by means of a structured questionnaire which was distributed amongst banks and SME borrowers in the Gauteng Province of South Africa. Contrary to the general view that commercial banks are disinclined to provide credit to SMEs, the study found that South African banks are keen to serve the SMEs and are therefore making efforts to penetrate this potentially profitable market segment. However, several obstacles are potentially restricting the involvement of banks with SMEs in South Africa. The findings revealed that regulations such as the Financial Intelligence Centre Act (FICA) and the National Credit Act (NCA) came out strongly as major hindrances of bank financing to SMEs. Furthermore, it was shown that compliance with the NCA was ranked higher than credit history and profitability as a factor hindering the approval of SME loans. - iii - However, by using the structural equation modelling (SEM), the results also show that there is a positive and significant influence of lending technology and collateral on the supply of credit to SMEs. Variables such as creditworthiness, collateral and e-banking were found to have a positive and significant impact on the provision of credit to SMEs by commercial banks. For both the supply- and demand-side analysis, technology came out as the most important predictor of SME access to finance. This means that banks should strive to align their lending techniques with the dynamic technological developments so as to reach as many SMEs as possible even in the geographically dispersed regions. It is anticipated that improving SME access to bank credit could be the key to the growth and sustainability of SMEs, the alleviation of poverty and unemployment; and consequently leading to the growth of the South African economy. / Business Management / D. Com. (Business Management)