In little more than a decade, Islamic banking has grown into a $300 billion a year industry worldwide and is now finding its way to South Africa hence providing a wealth of opportunities to new and existing players in the South African banking industry. One of the key factors differentiating Islamic financial institutions is the need to demonstrate compliance with Shariah in all their activities. There is a lack of consensus in the industry as to whether certain transactions or activities are compliant, which can cause confusion among practitioners and customers as well as restricting the concept of Islamic finance from wider acceptance and recognition.Therefore, the purpose of this study is to test whether Islamic Banking can work in the South African market. Qualitative research was conducted to determine the South African banking environment, customer sceptism, controversies and challenges faced with regard to this growing industry. Content analysis of 16 depth interviews with banking representatives, South African Reserve Bank representative, Islamic scholars and Muslim customers revealed interesting insights that guided the research to possible outcomes. Together with presenting a model that Islamic banking can use, a number of strategic implications and limitations are discussed, and directions for future research are also addressed. / Dissertation (MBA)--University of Pretoria, 2010. / Gordon Institute of Business Science (GIBS) / unrestricted

It is estimated 16-million out of a potential 30-million adults in South Africa are currently unbanked. A number of collaborative initiatives between the banking sector and the government have been introduced to address the problem with limited results. This study focuses on interrogating the data obtained through the FinScope 2005 survey to challenge the assumptions on which these initiatives are based.The FinScope 2005 survey interviewed 3885 individuals across all nine provinces in South Africa. In addition to the banking status of the respondent, information was gathered on financial literacy, employment and trust in the banking segment. Frequency analysis, descriptive statistics, tests of independence and correlation matrices were used to determine the relationships between financial literacy, employment and trust and the banking status of the respondent.The respondent’s banking status was found to be dependent on financial literacy and employment but there was no evidence of dependence on trust in the banking segment. The correlation between the dependent variables was found to be low indicating that individually they do not fully explain the banking status. Further research is recommended to create a representative model. / Dissertation (MBA)--University of Pretoria, 2010. / Gordon Institute of Business Science (GIBS) / unrestricted

In order to continue the economic transformation of South Africa, conditions must be created to encourage private sector activity and enterprise development that will translate into economic growth. The banking industry has a major role to play in the creation of this enabling economic environment and the government is using banking regulation to align the effort of the banks towards this goal. This effort will only be effective if the benefits and costs of the regulations can be identified, the benefits exceed the costs and they accrue to the correct stakeholders. The study reviews five recently promulgated legislative elements using triangulated documentary and primary research. The research reveals a conflict between the objectives of international compliance and social and economic development. The support of the enabling environment by the regulations is skewed towards the international compliance objective at the expense of the social and economic objectives. The benefits in the legislation accrue to banking customers and South African society and the major costs are incurred by the banks. If the banks use a positive, long term approach and view regulation as a business opportunity rather than a compliance initiative, the benefits of the regulation will exceed the costs and the regulation will contribute to the overall enabling economic environment. A model has been developed to show the relationship between the enabling environment, the regulation, the costs and benefits accruing to the stakeholder groups and the effects of the approach of the banks on the achievement of the objectives. / Dissertation (MBA)--University of Pretoria, 2010. / Gordon Institute of Business Science (GIBS) / unrestricted

Since the early 1990’s IT has particularly become popular with most central banks, largely due to a failure of both monetary aggregate and exchange rate policies in bringing about price stability ( Angeris and Arestiz, 2005).The literature, however raises concerns about the ability of emerging markets in implementing inflation targeting (Mishkin, 2004). In particular, concerns are raised about the commitment to maintain central bank independence, identified as a crucial pre-requisite in the implementation of IT. South Africa, implemented IT in February 2000 and it being an emerging market, questions about the level of the independence of the central bank are relevant. To assess legal independence an index developed by Cukierman (Cukeirman, 1992) is used. In assessing actual independence, two approaches are used. These included interviews with a representative from the South African Reserve Bank (SARB) as well as eleven economists from the private and academic sector. Findings reveal a central bank that has significantly higher actual independence than legal independence, a strange phenomenon for an emerging market. The Bank seems to have largely succeeded in maintain its independence since the implementation of inflation targeting despite the fact that South Africa is an emerging market. The lower legal score, however, raises concerns about the lack of sufficient provision for independence of the central bank in the law. / Dissertation (MBA)--University of Pretoria, 2010. / Gordon Institute of Business Science (GIBS) / unrestricted

Currently the sales and credit departments of Private Banks have divergent business objectives. The sales department’s primary objective is to sell the bank’s products and generate revenue through new business acquisition, while the credit department’s objective is to balance risk and reward by ensuring that capital is deployed in the most effective manner. In the private bank department of the bank that was studied, these divergent objectives have led to inefficiencies in the business processes and have promoted the silo-based operations, which impact the customer experience negatively. Several strategies for future implementation were identified in order to optimise the alignment between the sales and credit functions of the private banking department of the bank. The strategies were categorised into customer centricity, relationship pricing, alignment of personal key performance indicators, addressing of system inefficiencies and exploring various alternate strategies (e.g. strategies that aim to achieve a better understanding of each others’ roles and work pressures better; improving communication; aligning their goals; working towards supporting the success of each department). It was found that there was a strong alignment of the views of the private bank staff (credit and sales viewed as a group) towards the future strategies. When the views of the credit staff were compared with the views of the sales staff, it was found that there was alignment of the opinions of the two departments on the futures strategies that could be implemented to allow credit and sales to work more effectively together. / Dissertation (MBA)--University of Pretoria, 2010. / Gordon Institute of Business Science (GIBS) / unrestricted

In spite of the fact that Indian civilization was at the height of its glory when Western civilization had not yet seen the light of day, and India was once far more advanced industrially than any one of the present industrialized nations, the Country until very recently had long been the forgotten Nation of the East because her affairs were controlled for some two hundred years by a foreign colonial power. It' was only as recently as 1947 that India finally got her independence and the national Government was able to take steps to improve the economic condition of its people. This was to be accomplished through a broad developmental program, consisting of a succession of Five Year plans. In this herculean undertaking the Country's banking system has played and continues to play a leading role. It provides the Country's currency, finances its current output and mobilizes in one form or another the savings so desperately needed for the industrial expansion program now underway in India. In view of its importance in the expanding Indian economy the author undertook, as a thesis, the task of setting forth both historically and analytically the structure and development of the Indian banking system. The System itself consists of two large non-competing, though not completely dis-associated, parts usually referred to as the "organized" and "unorganized" sectors of the Indian money market. The link between the two sectors is so weak and tenuous that changes in one are seldom reflected in the other. The unorganized sector consists of a large number of Indigenous bankers and money lenders who, since time immemorial, have catered to the banking and credit needs of the Indian economy. With the institution of the European banks in India the activities of these bankers were mainly restricted to financing the internal trade of the Country and to providing for the credit needs of agriculturists, artisans, small tradesmen, etc., and save for local trade associations, national trade organizations and such correspondents as outside collections and remittances make necessary, these bankers operate independently without any direction or control by the Reserve Bank. So far all attempts of the Reserve Bank to bring them within its province and thus regulate their banking business have borne no fruit. It has long been held, with some element of truth that the members of the unorganized sector of Indian money market tend to charge exhorbitant rates of interest on their loans, and have long stood in the way of the economic progress of the Country. Moreover it is contended that they have further complicated and compounded the problems of their usually impoverished borrowers. However, this extremely one-sided view seems to overlook their real contribution to Indian banking needs and the important role they play in financing the internal trade of the Country. They provide credit facilities to those who can provide no tangible security and thus finance many undertakings which could not otherwise be carried out. The so called organized sector of the Indian money market consists of: i) a substantial number of privately owned Joint Stock banks incorporated under Indian laws and manned primarily by Indian nationals; ii) a number of branches of foreign banks popularly known as Exchange Banks which are managed almost entirely by foreigners; iii) a State sponsored System of Cooperative and Land Mortgage banks designed ultimately to support the Indigenous bankers and money lenders; iv) a rather unique postal savings system which provides savings facilities to the lower income group of the Indian population and channel these savings into productive enterprises through the purchase of Government securities; v) the now publicly owned State Bank of India which even as a foreign owned and operated institution, serving an immense private banking clientele, functioned for many years as a semi-central bank of India, and still retains many of its central banking functions; and finally, vi) the recently established and now nationalized Reserve Bank of India around which have been arranged a number of public and semi-public financial institutions which in one way or another are designed to help fulfil the twin goals of the National Government - i.e., a modern self-sustaining industrial economy based on a socialistic pattern. In addition to the Reserve Bank itself the latter group includes among others the aforementioned State Bank of India, the Industrial Finance Corporation, the National Industrial Development Corporation and the Life Insurance Corporation of India. The latter has been given a monopoly of all life insurance business within India and thus collects and makes available to the Government a large part of the voluntary savings of the Indian people. The author's task in this thesis is a large yet unpretentious one. By tracing the growth and development of each of the above classes of institutions he has sought to bring before a Western audience not only the nature of the banking structure and banking practices in India but the related problems still to be solved if the Country is to achieve the ultimate goal of a higher standard of living in a self sustaining and dynamic economy. Each of the several classes of banks has been analysed with a view to establish its past contribution to the development of India and the role it is designed to play for the future growth of Indian economy. Most of the Country's financial planning and planning instrumentalities originate in the joint action of the Government and the Reserve Bank with the latter in the role of a consultant advisor and finally that of a servant to carry out the planned programme. In an overall sense the expanding role of the Reserve Bank provides the most revealing part of this thesis. This institution has developed into a strong, all embracing central bank employing the most modern credit control and direction measures. The bank has used these measures not only to check any undue increase in bank credit but to channel it into various planned productive enterprises. Moreover it functions as a regulatory authority over all public and private, scheduled and non-scheduled banking institutions. In this capacity the Bank has strengthened the Indian banking structure by encouraging and insisting on the consolidation of small banks and has improved their operations by a system of regular inspections. Its achievements since its nationalization both in the field of monetary management and the development of a sound and efficient banking system provide a new chapter in the history of Central banks. / Arts, Faculty of / Vancouver School of Economics / Graduate

Although Turkey is a very old country, lying across between the Near East and the West, it has only quite recently acquired a modern system of its money and banking institutions. For the many centuries which preceded the Revolution of 1923 and the institution of the program of Westernization, the prerogative of coinage was exercised by the ruling Sultans as much, it would appear, as a fiscal device for meeting the emergency needs of the royal treasury, as a convenience for the business community. The country's modest banking needs were: supplied by merchants, exchange dealers and casual money lenders. Banking as a separate undertaking did not make its appearance until the middle of the nineteenth century and then legally as a result of the fiscal emergencies in which the Ottoman Rulers bartered banking monopolies and the privilege of issue for the support of the country’s credit abroad. The recipient of the exclusive right of note issue was the British-French owned and operated Osmanli Bankasi which for many years was the country's leading bank. Since 1923 the country has experienced a growth and expansion in the banking structure as the result of the undertaken economic development program which has no parallel in modern history. A major part of this growth has been the consciously planned result of the relative vast reconstruction program through which the government is attempting to modernize the Turkish economy and to exploit its latent natural resources. At the center of this new financial revolution is the Central Bank of the Turkish Republic. Surrounding it are a number of government owned and operated quasi-public institutions charged with the responsibility of carrying out the State's program of industrialization, and the purely private banks. While considerable capital has been obtained from abroad and from domestic saving they have been a substantial part of these investment sources and have not been sufficient to meet the needs of the reconstruction program. During the past few years an increasing reliance has been placed on the issue privilege of the Central Bank, causing a serious decline in the purchasing power of the Turkish Lira. The recovery of the existing inflation in the country would appear to depend upon the by no means certain success of the economic development program. The future of the new banking community would also appear to depend upon the success of this program. / Arts, Faculty of / Vancouver School of Economics / Graduate

No abstract included. / Arts, Faculty of / Vancouver School of Economics / Graduate

This thesis proposes a decentralized procedure for optimal allocation of assets in loan divisions within commercial banks; simulation runs of the procedure demonstrate the feasibility of such an establishment in commercial banks. The decentralized procedure can not only reduce information inputs of the asset allocation system, but also provide a systematic procedure for estimations of the cost of funds and the cost of risk used in the profitability analysis. The simulation results also suggest that the appropriate price paid for the future customer relationships should vary according to the level of loanable funds available to the bank. Moreover, the simulations reveal that the interaction of risk within a bank is very complicated and point out the need for establishing some sort of procedures to take into account these interactions. / Business, Sauder School of / Graduate

The inherent uncertainty of a bank's cash flows, cost of funds and return on investment, along with the increased variability of economic conditions during the past decade, have emphasized the need for greater efficiency in the management of a bank's assets and liabilities. A consequence has been an increased number of studies on how to structure a bank's assets and liabilities so that an "optimal" trade-off exists between risk, return and liquidity. Except for the Bradley and Crane (BC) model, the solution techniques proposed in the literature are computationally tractable only if uncertainty is ignored. Unfortunately, the BC model is not operationally appealing due to severe computational limitations, and a number of undesirable formulation features (such as the restricted feasible region for first period decisions). Given these deficiencies in the literature, the purposes of this dissertation are to develop an asset and liability management model (ALM) that is computationally tractable for large realistic problems and to demonstrate that this model is superior to existing models. The ALM model developed in this dissertation is a stochastic linear program with simple recourse (SLPR). This model incorporates the following essential features of asset and liability management: 1) the stochastic nature of the problem (by utilizing a set of random cash flows (deposits) with a given discrete probability distribution), 2) simultaneous consideration of assets and liabilities, 3) transactions costs, and 4) multi-periodicity. The ALM model was applied to Vancouver City Savings Credit Union's asset and liability management for a five year planning period in order to demonstrate the effort necessary to implement the model. Computational tractability for this large problem was maintained by using Wets' algorithm for solving SLPR. A simulation was run on a real (uncertain) environment to compare the decision making effectiveness of the solutions generated by the SLPR and stochastic dynamic programming (SDP) models. The findings of this dissertation are: 1) the ALM model is superior to an equivalent deterministic model, 2) the solution of the ALM model is sensitive to the asymmetry of the probability distributions of the cash flows, 3) the effort required for the implementation of the ALM model is comparable to that of an equivalent deterministic model, 4) the SLPR formulation is computationally superior to the SDP formulation utilized by Bradley and Crane, and 5) the simulation indicates that the SLPR formulation results in a better initial period decision than the SDP formulation (this is due to the restrictions imposed by the SDP formulation of maintaining feasibility for all possible forecasted economic scenarios for the first period decision). / Business, Sauder School of / Unknown