Electronic Theses and Dissertations (Masters)

Permanent URI for this collectionhttps://hdl.handle.net/10539/37781

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    The implementation and practical issues of loan loss provisioning under IFRS 9 in South Africa
    (University of the Witwatersrand, Johannesburg, 2024) Muroyiwa, Deysel Tichakunda; Brahmbhatt, Yogesh
    Purpose: The study conducts a thematic evaluation of IFRS 9 by focusing on the assessment of credit risk and loan loss provisioning. The aim of the study is to investigate the post- implementation and practical issues that are currently being faced when accounting for ECLs under IFRS 9. This study makes a valuable theoretical contribution by providing primary evidence on the operationalisation issues of loan loss provisioning under IFRS 9. More specifically, this investigation could be beneficial for standard setters, regulators as well as banks, and other financial entities. Research methodology: The study employs a qualitative research approach and semi- structured interviews were conducted as the primary means of data collection. Using both purposive and convenience sampling techniques, a total of ten participants were selected to take part in the study. The data gathered during the interview process was transcribed, analysed, and interpreted using thematic data analysis. Four themes emerged from the data analysis procedure, which are: i) Transitional process; ii) Impact of the transitional process; iii) Governance, processes and controls, and; iv) IFRS 9 impairment modelling judgements. These themes were analysed using verbatim extracts obtained from the interviews. Findings: The study elaborated on two main recent evolutions of financial instrument systems, namely IAS 39 and IFRS 9. Under IAS 39, the research highlighted that there is no recognition of expected losses stemming from future events. Financial institutions were required to deal with losses only after the occurrence of a negative event, already affecting credit quality. The recently introduced IFRS 9, which came into force in January 2018, marked a paradigm shift from incurred loss to expected loss but differed at the moment at which expected losses are recognized as it demanded to account for the expected losses in the next 12 months as long as the asset did not show a significant increase in risk, thereby triggering the recognition of the ECL for the remaining lifetime. The importance of applying reasonable judgement guided by and within conceptual or standard-level boundaries was also discussed in the study. It was also argued that IFRS 9 places great responsibility on the judgement of prudential supervisors mostly because of their role in ensuring the accurate use and implementation of IFRS 9. Their role mostly involves a thorough assessment of banks to determine whether appropriate credit risk management practices are implemented, assessing whether the calculation and measurement of loan loss provisioning are adequate, evaluating whether adequate policies are in place for the early identification of problem assets, and ensuring whether there is consistency in the application of the new accounting standard across institutions. With regards to the issue of preparedness in the transition to IFRS 9, the respondents outlined many activities such as workshops, presentations, and training by various experts in the accounting, statistical, economic, and actuarial fields to better prepare users of IFRS 9. Although numerous benefits come with the implementation and transition from IAS 39 to IFRS 9, entities also faced huge challenges. This was unanimously revealed by all the participants as they were in complete agreement that the implementation of IFRS 9 was far more complex than that of IAS 39. These challenges include issues in data and modelling, systems infrastructure, governance and control, cost, and vagueness. Following the challenges been faced, the study also revealed the importance of governance and controls through which financial institutions have to strike the right balance between building a sustainable revenue proposition and ensuring regulatory compliance. The study also revealed 3 key judgement areas of IFRS 9 that have been applied in the impairment of ECLs. Because financial institutions were given latitude to make different judgements when modelling IFRS impairment provisions, the researcher identified that there is alignment and divergences in the identified judgements areas. These judgement areas include the applicable definitions of default, the determining factors in SICR and the structure of forward looking macroeconomic variables. There are also divergences and inconsistencies present in the application of certain key judgement areas in IFRS 9 impairment modelling that was highlighted by some of the participants Originality Value: Studies that pertain to the post-implementation and practical issues of loan loss provisioning under IFRS 9 in South Africa are by no means exhaustive and very limited in number. This study, therefore, contributes to the limited body of interpretive, non-positivist financial reporting research being performed in South Africa.
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    The influence of fintech share trading and investment platforms on the participation of South African professionals in the South African equity capital market
    (University of the Witwatersrand, Johannesburg, 2023) Ishwarlal, Saiyuri; Sebastian, Avani; Brahmbhatt, Yogesh
    Background: The emergence of revolutionary financial technology as a result of the transition towards the Fourth Industrial Revolution, is transforming the financial services sector. Innovative financial technology, such as fintech share trading and investment platforms has the potential to increase access to the equity capital market, through enhanced user- experience, minimal trading costs and greater convenience. Purpose: The purpose of this study is to examine the influence of fintech share trading andinvestment platforms on the participation of South African professionals in the South African equity capital market. This study contributes to the emerging stream of fintech research, through examining the impact of fintech platforms on participation in the equity capital market. Method: A survey questionnaire was distributed electronically, and responses were received from professionals with various specialisations. The 199 usable responses were analysed using descriptive statistics and non-parametric tests. Findings: The findings of this study reflect a large percentage of professionals would not engage in the trading and investment of shares in the absence of fintech platforms. This suggests that fintech platforms are positively contributing towards the participation of South African professionals in the equity capital market. An individual’s age, level of education and number of years of investment experience show a statistically significant difference in respect of the dependency on fintech platforms for participation in share trading and investment. Data security and privacy concerns, a low level of trust in fintech platforms and lower levels of awareness of financial products and services are factors that inhibit the use of fintech platforms. Greater ease of use, affordability, efficiency and flexibility are elements that encourage the usage of fintech platforms
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    Understanding the attributes and characteristics of cryptocurrency ownership: A South African study
    (University of the Witwatersrand, Johannesburg, 2023) Jetha, Hesita; Brahmbhatt, Yogesh
    Background: This study investigates the attributes and characteristics of cryptocurrency investors in South Africa and the attributes of cryptocurrencies that drive investment or non-investment. Objectives: This study aims to explore the demographics and sociodemographic factors of cryptocurrency investors as well as the emotions and biases that impact investors’ decisions to invest in cryptocurrency in order to investigate the individuals who invest in cryptocurrency and the reasons why they invest in cryptocurrency. Methods: A sample of 298 South African residents aged 18 and above completed an online survey that assessed their cryptocurrency ownership, demographics, motives for investment, attitudes toward cryptocurrency, and other relevant variables. Descriptive statistics and logistic regression analyses were conducted to examine the relationship between these variables. Results: The results showed that cryptocurrency investors are more likely to be males, under the age of 35, who are currently employed and have higher income levels. The individuals’ main motives for investing in cryptocurrency were the opportunity to obtain high returns and the new technology that cryptocurrency encompasses. In addition, the results showed that attitudes toward cryptocurrencies significantly impact their decision to invest in cryptocurrency. Conclusion: These findings suggest that more information relating to the risks involved in cryptocurrency investment as well as the potential of cryptocurrency to be used as a medium of exchange is required among individuals to protect themselves against losses and simultaneously allow them to take advantage of the lucrative benefits that cryptocurrencies offer. Furthermore, policymakers, the government, and businesses require more information regarding cryptocurrencies in order to have the necessary policies in place and to stay competitive