The thesis assesses bank performance from two aspects: growth sustainability and the externality impact on the growth of non-financial industries. With regard to sustainability, the study considers two issues. One is financial performance with a focus on understanding what determines profitability and stability, particularly the role of market structure in generating profits. The second aspect is that of exploring what drives bank growth. Do banks grow through a competitive process or a noncompetitive one? In the context of externality, the thesis investigates whether bank competition and stability contribute to the growth of non-financial industries. The thesis starts by investigating the effects of market structure on profitability and stability using the sample data of 1929 banks from 40 countries including both emerging and advanced economies over 1999-2008. It attempts to examine which school of theories provide more explanatory power to profitability and stability in banks: the traditional structure-conduct-performance (SCP) or relative-market-power (RMP) hypotheses. The results show that a greater market share leads to higher bank profitability in favour of the RMP theory evidenced in advanced economies; however interestingly there is no evidence in support of these theories in emerging economies. Furthermore, the RMP effect appears more sustainable when compared with the SCP. This suggests that a more concentrated banking system may be more vulnerable to financial stability. Regarding the second aspect of banking sector performance, we look at an issue of competition by employing data from around 5850 banks across 49 economies during 2001-2010. We employ different industrial economics theories to estimate the degree of bank competition. The results show that bank competition varies across countries in terms of competition intensity and process. Some banks compete more intensity for efficiency and some compete less. Interestingly, all indicators show that emerging banking markets are less competitive than their counterparts in advanced economies. Furthermore, the thesis explores whether competition and stability in the banking sector can affect the growth and market structure of nonfinancial industries and hence economic growth. Empirical evidence from 23 industries for 48 emerging and advanced economies shows robustly that a more vigorously competitive and thus efficient banking sector allows financially dependent industries to grow faster through supporting small firms and new entrants that disconcentrate market structure. Policy implication is clear: competition, rather than market structure, is what we need for restructuring our banks that can help economic growth.

How should managers choose between improvements in revenue and gross margin rate, when both contribute to overall profitability? Many finance managers face this question when balancing their companies’ targets and goals. Prior studies show that companies’ stock returns respond to both metrics, especially when they are consistent with each other, which I replicate in my sample. I predict that the relative strength of responses to revenue and gross margin percentage depends on industry growth. I find that the market’s response to revenue growth is greater in high revenue growth than low revenue growth industries. I also argue that the market responds more positively to gross margin rate changes in low growth industries, but the differences are statistically insignificant.In a second study, I apply the theory to the generic pharmaceutical industry where revenue growth is slower. I expect a higher focus on gross margins or pricing when barriers to entry are lower. The Department of Justice and State Attorney Generals sued generic pharmaceutical companies for violating the antitrust laws and manipulating drug prices (consolidated as the multi-district litigation case 2724), making the industry less attractive. I study the pricing changes around the lawsuits and how they affected the likelihood of generic drug manufacturers staying vs. leaving the industry. I also analyze the disparate impact of the lawsuit on large vs. small and medium manufacturers, as the lawsuits listed many large manufacturers as defendants. / Business Administration/Accounting

Thesis (MBA (Business Management))--University of Stellenbosch, 2010.

M.Tech. Business Administration. Business School. / The implementation of the Mineral and Petroleum Resources Development Act (MPRDA) of 2002, effective as from 1 April 2004, presented a huge challenge as its implementation gave rise to concerns expressed by various key stakeholders. It also fuelled perceptions that South Africa may have sacrificed its competitiveness. In an attempt to manage these challenges the Mining Industry Growth Development and Employment Task Team (MIGDETT) was instituted in December 2008 by the mining industry in South Africa. During the MIGDETT process stakeholders concluded unanimously that transformation and growth are mutually inclusive concepts. Against this background, the objective of this study was to assess the implementation of the MPRDA Act using well researched mineral investment and competitiveness guidelines including Michael Porter's framework.