Credit risk mitigation that can be applied by commercial banks in assessing the lending decision /credit risk when advances and equity investments are considered for BEE classified companies. / A research report presented to the Graduate School of Business Leadership, University of South Africa / The previous political dispensation limited black people’s participation in the South
African economy. Poor credit records, lack of training, resulting in skills and capacity
gaps further limited entry into the lending market. These aspects are considered the
main limitations in obtaining finance for the Small, Medium and Micro Enterprises
(SMMEs).
This research report focuses on how credit risk can be mitigated by commercial banks
in lending to Black Economic Empowerment (BEE) companies in the medium to large
market. Exploratory research was conducted using various methods to achieve
methodological triangulation. These methods consisted of a literature review,
interviewing experts in the field and case studies. A qualitative research approach was
followed. It was found that the lack of own contribution and security were still prevalent
in the medium to large market, but the quality of management (little training and skills)
was deemed not to be a limitation as suitable credit risk mitigants were identified. No
credit risk mitigants were identified to mitigate poor credit records. It is postulated that
by adopting and applying the identified credit risk mitigants, commercial banks can
increase their success rate in lending to BEE companies. It will further assist in the
transformation of black people and compliance with the Financial Services Charter.
It is recommended that a similar study be conducted in the agriculture, hunting,
forestry and fishing industry. The reasons why BEE companies applications are
declined could also be investigated. Further studies could also explore other external
factors such as economical, legal and social that could have an influence on the
funding of BEE companies.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:unisa/oai:umkn-dsp01.int.unisa.ac.za:10500/163 |
| Date | 08 May 2009 |
| Creators | Meyer, Petrus Gerhardus |
| Contributors | Ackermann, P. L. S. (Petrus Liebetrau Schmidt), 1945- |
| Publisher | Unisa |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Dissertation |
| Format | 1 online resource (108 p.) |
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