Banks, like other business firms, must attract outside funding within competitive capital markets, must face competition in product, and must deal with corporate governance issues deriving from agency problems and asymmetric information. Corporate governance in banks is unique compared to non-financial firms, with factors such as higher opaqueness, heavy regulations, and government interventions, which thus require distinct analysis. Although it is well recognised that corporate governance can affect bank value, in this thesis I combine external and internal corporate governances by considering board composition and ownership structure, as well as trading behaviour on stock markets. The main objective of this thesis is to study empirically the impact of various governance mechanisms on bank stability, in terms of capital strategy, risk-taking and performance. The finding is that there exists a significantly positive relationship between market discipline and bank capital structure. In addition, over-performing banks attract a high level of informed trading, which in turn leads to a higher level of capital buffer held by a bank. Also, banks with strong corporate governance are associated with higher risk-taking. More specifically, banks that have an intermediate board size, a separation between the CEO and the chairman of board, and are audited by the Big Four audit firm, are likely to take higher risks. Banks with more state shareholders also tend to have poorer performances, and banks with higher domestic and private shareholders generally operate more profitably. Ownership type diversity is associated with better bank performance, while banks with concentrated ownership are worse performing. Finally, banks with political connections distribute more credit than nonpolitically connected banks. The results have certain policy implications for understanding the role of governance in affecting bank operations that, in turn, could improve bank prudency and assist the design of an enhanced regulation framework. Regulators should reduce protection, improve banks' asset quality, and strengthen market discipline.

The overall objective of this study was to determine the effect of Basel ll on the South African banking system through possible changes in the way in which a bank conducts its business. This purpose arose from the publication of the new Basel ll Framework on 26 June 2004, which has been adopted for implementation by the South African Reserve Bank. South Africa has set January 1, 2008 as the implementation date for Basel ll. The South African banks have mainly been focussing their efforts on becoming Basel ll compliant. Business line management and marketers have up until now not paid much attention to the likely impact of Basel ll on their markets and product offerings. A literature study was undertaken which included a review of the Basel ll Framework, impact studies and a review of the relevant literature on the topic. The Framework was analysed in order to determine the major impact themes. Once these impact themes were identified, the literature on those areas of impact was researched. The analysis of the Basel ll Framework identified three important themes that will have a significant impact on banks. There will firstly be an impact on market segments and product offerings. Secondly, there will be an internal impact on the banks in the form of increased costs, decision-making and capital management. The final theme identified was the global impact on the banks, especially regarding procyclicality and mergers and acquisitions. vii The research indicates that there will be both winners and losers. Banks that have large retail and mortgage exposures will benefit the most from Basel ll, whereas banks that have large exposures to sovereigns, banks and specialised lending portfolios will be negatively impacted. A capital charge for operational risk will mean that some areas such as corporate finance and asset management will be allocated capital, which was not the case under Basel l. Studies indicate that this new operational risk capital requirement more than outweighs any reduction in credit risk capital requirements. Customers that have high credit ratings are more likely to benefit from lower credit spreads. Similarly customers that have poor credit ratings can expect an increase in their pricing due to the higher capital requirements for these customers, unless they can provide a bank with ancillary revenues. Competition in the retail and mortgage markets will intensify due to the favourable capital requirements for these portfolios. The large South African banks will become takeover targets because of their large exposures to these markets. Basel ll will have a major impact on the way in which banks will do business in the future and as a result banks should view the implementation of the Framework as an opportunity to gain strategic advantages rather than just a compliance obligation. / Prof. A. Boessenkool

The world political economy passed through sea changes starting from the early-1980s. The transformation of the finance capital was an indispensible and important aspect of this change. Most of the countries in this process adapted themselves in line with the abovementioned transformation and liberalized their financial systems. However, the specific country practises diverged from each other considerably. On the one hand, some of the countries transformed their finance capital as part and parcel of a comprehensive political economy framework. As a result of the strategic involvement of the state (&lsquo / pro-active states&rsquo / ) and the organic interaction between the interest groups in the industrial and financial sphere, the transformation of financial systems materialized within the context of the upward restructuring of the overall political economy structure of these countries. On the other hand, some countries could not establish the productive link between industrial, financial and state elites (&lsquo / reactive states&rsquo / ) and the financial transformation exacerbated the structural problems in the countries in question. As illuminating examples of the former and latter categories, Spain and Turkey represent instructive cases in point. In this regard, the aim of this study is to make a comparative political economy analysis between the transformation of the finance capital in Spain and Turkey and to pinpoint the diverging paths of the political economy structures of these countries.