This study examined the nexus between bank performance and regulatory requirements in South Africa. The panel regression approach was used, which applied panel data from 12 banks that were registered in terms of the Bank Act 94 of 1990 over the period 2009 to 2019. A quantitative research approach was used to investigate the nexus between bank performance, bank regulations, bank-specific factors and some macroeconomic factors. A regression analysis was conducted on four bank performance ratios using pooled ordinary least square regression, fixed effects, random effects and generalised methods moments. The two-step generalised system methods of moments approach was preferred over the other methods because it eliminated the problem of endogeneity. The results showed that capital adequacy and size have both a positive and negative significant effect on bank performance, while interest rates, non-performing loans, liquidity coverage ratios and net stable funding ratios had a negative and significant effect on bank performance.
The study concluded that South African banks could enhance their performance by tightening their credit risk assessment framework to be more prudent in their lending practices in order to improve the lending quality of their loan books. It is recommended that banks keep their capital levels at a minimum to avoid excessive risk-taking, and that they by embark on efficient revenue enhancement activities such as increasing retained earnings. Banks must further look at their clients on an overall basis, not just a transactional basis, as this will improve their non-interest revenue income by introducing innovative products. Lastly, the banks must lower their liquidity risk exposure by collectively managing their capital adequacy ratio, size of the bank, interest rates, non-performing loans, liquidity coverage ratio and net stable funding ratio. The South African Reserve Bank should tighten regulatory requirements by improving its supervision and oversight functions; banks must to adhere to lending practices and foster a healthy and adequately capitalised balance sheet. Lastly, the SARB must align its macroeconomic forecast for lending rates with regulatory requirements to ensure that economic performance is a catalyst for bank performance. This study contributes to the empirical research repository on the nexus of bank performance and regulatory requirements. More importantly, it identifies the significant factors that affect South African bank performance, by identifying the deficiencies in South Africa’s regulatory requirements, which will provide the South African Reserve Bank with insight into ways of enhancing its regulatory requirements to improve the performance, management practices and sound capital adequacy of the banking sector. / Finance, Risk Management and Banking / M.. Com. (Business Management (Finance)
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:unisa/oai:uir.unisa.ac.za:10500/27028 |
| Date | 11 1900 |
| Creators | Khoza, Mpucuko Armstrong Ezekiel |
| Contributors | Marozva, Godfrey |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Dissertation |
| Format | 1 online resource (xii, 171 leaves), application/pdf |
Page generated in 0.0022 seconds