South African Banking Industry Research Articles

Liquidity management by South African banks

The management of liquidity is of prime importance to banks. This management process should be carefully planned and continuously managed to master a global and/or national financial crisis. The objective of this research paper embodies the improvement of financial decision-making by banks regarding the management of their liquidity. To achieve this objective, a literature study was initially done. An empirical survey followed thereafter, focusing on the 10 biggest banks in South Africa. They are the leaders of the South African banking industry, and as South Africa is a developing country with an emerging market economy, the conclusions of the study may also be valuable to banking industries of similar countries. The importance of the liquidity management factors, the problem areas surrounding this topic, as well as how often the requirements are adjusted to ensure proper and effective liquidity management are addressed.

The Macroeconomic Determinants of Banking Efficiency: An Empirical Analysis of South Africa Against the Rest of the World

The efficiency of a nation’s banking industry is a critical factor in the quest to realize economic growth and prosperity for its citizens. This study identifies a host of macroeconomic factors which have been shown to have a strong causal link with the efficient operation of a given banking industry. The efficiency of the South African banking industry is found to be lagging behind most of the twenty representative countries, notwithstanding the way one classifies efficiency. Only among some nations from the South American and Eastern European regions is South Africa’s banking industry efficiency profile comparable.The increase in the size of skilled and available work force, the growth in the size of real spendable per capita GDP, the wide availability of technology and computers, all positively increase the efficient operation of a banking industry. The erosion of an economy’s currency has a negative effect on efficiency but this is not found to be significant across all efficiency measures. The findings point to significant drivers, that if found to be lacking, are likely to indicate a climate of inefficiency. Finally we use Data Envelopment Analysis (DEA) to measure the efficiency of Decision Making Units (DMU’s), in this case, individual banks. However, unlike other studies, we use it as a robustness check of the previous empirical results. These two distinct methods yield near identical results. We conclude that the major causes of inefficiency seem to be structural; the concentrated ownership of the sector, interlocking directorships on bank boards and the oligopolistic nature of the industry mean that South Africa’s customers are paying too high a price for intermediary services.

Competition and Efficiency in the Banking Sector in South Africa

: We analyse the evolution of competition and efficiency of the banking sector in South Africa using firm-level data for the period 1999–2008. We adopt a three-step estimation approach. First, we measure efficiency using the data envelopment analysis (DEA) methodology. Second, we use the Panzar–Rosse approach to derive the H-statistic for competitive conditions in banking. In the third stage, we take into account the role of managerial ability in competition by re-estimating the Panzar–Rosse model, with the DEA efficiency scores as an explanatory variable. Overall, the results show that although average efficiency was trending upwards over the period, the number of efficient banks was falling. Also, it is found that for the period 1999–2008, the structure of the South African banking industry was characterized by monopolistic competition. This result may reflect domination by five large banks, which together account for over 85 per cent of total banking assets.

Investigating e-mail overload in the South African banking industry

The information workers of today have a wide range of information sources available to make valuable decisions, so much so that it can lead to information overload. The purpose of this research was to investigate the extent of information overload in the South African banking industry. The empirical part of this study was done at the Standard Bank of South Africa, where 115 questionnaires were distributed to three categories of employees. It was found that e-mail is one of the most used computer-mediated applications and is used more than the World-Wide Web, instant messaging or peer-to-peer file sharing. Of the respondents, 65% felt overwhelmed by the amount of e-mails they received as 25% received more than 60 e-mails per day. A third of the respondents dedicated three hours or more to e-mails per day. Respondents agreed that the implementation of policies is important to ensure compliance with legislation, protection of privacy rights and copyright, and the filtering of spam. In conclusion, the respondents indicated that formal training in e-mail management should make a significant difference in the usage of e-mail within the organization and reduce e-mail overload.