Measuring the effect of the National Credit Act on indebtedness in South Africa
- Botha, Ilse, De Wet, Shaun, Booyens, Marno
- Authors: Botha, Ilse , De Wet, Shaun , Booyens, Marno
- Date: 2015-04
- Subjects: Consumer credit , Credit regulation , Debt , Over-indebtedness , South Africa. National Credit Act, 2005
- Type: Article
- Identifier: uj:5523 , ISSN 19957076 , http://hdl.handle.net/10210/13927
- Description: South Africa continues to exhibit high levels of debt-to-disposable income along with a high number of impaired credit records. The National Credit Act No. 34 of 2005 (NCA) was established in order to address these high levels. This study expands the limited research by investigating the NCA’s ability to reduce levels of over-indebtedness. The study employed quarterly data (2001-2013) in an OLS regression model in order to establish the determinants of over-indebtedness and assess the impact of the NCA. It was found that the macro-economic variables GDP, prime rate, property prices, consumer consumption expenditure, debt-to-disposable income and the level of unemployment were major contributors to the level of over-indebtedness. The NCA proved to have a positive significant effect on the levels of over-indebtedness, indicating that the NCA had not succeeded in its purpose of reducing the vulnerability of consumers to becoming over-indebted. The results suggest that the affordability assessment of the NCA must be improved in order to conduct a form of credit stress testing on consumers during their application for credit.
- Full Text:
- Authors: Botha, Ilse , De Wet, Shaun , Booyens, Marno
- Date: 2015-04
- Subjects: Consumer credit , Credit regulation , Debt , Over-indebtedness , South Africa. National Credit Act, 2005
- Type: Article
- Identifier: uj:5523 , ISSN 19957076 , http://hdl.handle.net/10210/13927
- Description: South Africa continues to exhibit high levels of debt-to-disposable income along with a high number of impaired credit records. The National Credit Act No. 34 of 2005 (NCA) was established in order to address these high levels. This study expands the limited research by investigating the NCA’s ability to reduce levels of over-indebtedness. The study employed quarterly data (2001-2013) in an OLS regression model in order to establish the determinants of over-indebtedness and assess the impact of the NCA. It was found that the macro-economic variables GDP, prime rate, property prices, consumer consumption expenditure, debt-to-disposable income and the level of unemployment were major contributors to the level of over-indebtedness. The NCA proved to have a positive significant effect on the levels of over-indebtedness, indicating that the NCA had not succeeded in its purpose of reducing the vulnerability of consumers to becoming over-indebted. The results suggest that the affordability assessment of the NCA must be improved in order to conduct a form of credit stress testing on consumers during their application for credit.
- Full Text:
The relationship between the exchange rate and the trade balance in South Africa
- Chiloane, Lebogang, Pretorius, Marinda, Botha, Ilsé
- Authors: Chiloane, Lebogang , Pretorius, Marinda , Botha, Ilsé
- Date: 2014
- Subjects: J-curve , Marshall–Lerner , Vector auto regression , Cointegration , Impulse response function , Foreign exchange rates - South Africa , Trade balance - South Africa , Manufacturing industries - South Africa
- Type: Article
- Identifier: uj:5530 , ISSN 19957076 , http://hdl.handle.net/10210/13941
- Description: The purpose of this paper is to test the existence of the J-curve effect and to show whether the Marshall–Lerner condition holds in the South African manufacturing sector. Using quarterly data from 1995 to 2010, the study uses the vector error correction modelling technique as well as impulse response functions to attain the research objectives. The results show that a long-run equilibrium relationship exists between the manufacturing trade balance and the three explanatory variables: real effective exchange rate, real domestic and foreign income levels. Overall, the results show that a depreciation in the domestic currency results in a deterioration in the manufacturing trade balance in the short run, and that this is followed by an improvement in the long run. The study finds evidence of the existence of the J-curve in the South African manufacturing sector. The long-run dynamics suggest that the Marshall–Lerner condition holds.
- Full Text:
- Authors: Chiloane, Lebogang , Pretorius, Marinda , Botha, Ilsé
- Date: 2014
- Subjects: J-curve , Marshall–Lerner , Vector auto regression , Cointegration , Impulse response function , Foreign exchange rates - South Africa , Trade balance - South Africa , Manufacturing industries - South Africa
- Type: Article
- Identifier: uj:5530 , ISSN 19957076 , http://hdl.handle.net/10210/13941
- Description: The purpose of this paper is to test the existence of the J-curve effect and to show whether the Marshall–Lerner condition holds in the South African manufacturing sector. Using quarterly data from 1995 to 2010, the study uses the vector error correction modelling technique as well as impulse response functions to attain the research objectives. The results show that a long-run equilibrium relationship exists between the manufacturing trade balance and the three explanatory variables: real effective exchange rate, real domestic and foreign income levels. Overall, the results show that a depreciation in the domestic currency results in a deterioration in the manufacturing trade balance in the short run, and that this is followed by an improvement in the long run. The study finds evidence of the existence of the J-curve in the South African manufacturing sector. The long-run dynamics suggest that the Marshall–Lerner condition holds.
- Full Text:
Mutuality and regulation : the transition from mutual to public in the South African long-term insurance industry
- Authors: Verhoef, Grietjie
- Date: 2012
- Subjects: Financial institutions - Demutualisation , Insurance companies - Demutualisation
- Type: Article
- Identifier: uj:5411 , ISSN 19957076 , http://hdl.handle.net/10210/10429
- Description: The mutual structure of various financial institutions has changed internationally, especially during the late 1980s and early 1990s. Various explanations have been offered. Some commentators argue the mutual organisational form has become redundant, others consider structural changes in the financial services industry as the main reason for organisational changes. In the United Kingdom the stronger emphasis on profitability had a profound impact on the decision to demutualise many building societies. In the USA the failure of mutual savings and loan associations resulted in demutualisation as a rescue strategy. This paper will explore the specific circumstances in South Africa of the changes in the mutual organisational form of the building societies and insurance companies. The mutual form of organisation has a long history in South Africa. This paper will explore the reasons for the early choice of mutuality and the recent forces leading to the demutualisation of companies in order to list as public entities on stock exchanges, both in South Africa as well as abroad. South Africa experienced varying degrees of international isolation and sanctions, but in the financial services industry a strong international connection was sustained. The South African experience will be considered against the international changes in the financial services industry as well as the regulatory changes in South Africa. The paper will explain the peculiar South African conditions as the context for the organisational changes in South African mutual.
- Full Text: false
- Authors: Verhoef, Grietjie
- Date: 2012
- Subjects: Financial institutions - Demutualisation , Insurance companies - Demutualisation
- Type: Article
- Identifier: uj:5411 , ISSN 19957076 , http://hdl.handle.net/10210/10429
- Description: The mutual structure of various financial institutions has changed internationally, especially during the late 1980s and early 1990s. Various explanations have been offered. Some commentators argue the mutual organisational form has become redundant, others consider structural changes in the financial services industry as the main reason for organisational changes. In the United Kingdom the stronger emphasis on profitability had a profound impact on the decision to demutualise many building societies. In the USA the failure of mutual savings and loan associations resulted in demutualisation as a rescue strategy. This paper will explore the specific circumstances in South Africa of the changes in the mutual organisational form of the building societies and insurance companies. The mutual form of organisation has a long history in South Africa. This paper will explore the reasons for the early choice of mutuality and the recent forces leading to the demutualisation of companies in order to list as public entities on stock exchanges, both in South Africa as well as abroad. South Africa experienced varying degrees of international isolation and sanctions, but in the financial services industry a strong international connection was sustained. The South African experience will be considered against the international changes in the financial services industry as well as the regulatory changes in South Africa. The paper will explain the peculiar South African conditions as the context for the organisational changes in South African mutual.
- Full Text: false
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