4. Electronic Theses and Dissertations (ETDs) - Faculties submissions

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    Financial Risk in Cross-Border Mergers and Acquisitions for Southern African Development Community Banks
    (University of the Witwatersrand, Johannesburg, 2024) Makhura, Sedise; Totowa, Jacques
    This study investigates the effect of cross-border mergers and acquisitions on financial risk and bank performance in the Southern African Development (SADC) region, where economic uncertainties are prevalent. Focusing on credit, market, and liquidity risks, the analysis draws on data across 14 bank cross-border mergers and acquisitions between 2002 and 2018. The fixed effects model used in this study revealed statistically significant relationships between performance, measured as the principal component variable of return on equity (ROE) and return on earning assets (ROEA); and specific financial risk factors, particularly non- performing loans to total loans as the credit risk proxy and net loans to total assets as the liquidity risk proxy. Firm size also demonstrated a significant relationship to performance. Although the aggregate financial risk variable did not present any statistically significant impact on performance, liquidity risk emerged as the decisive factor in determining bank performance. An increased loan-to-asset ratio was associated with deteriorated bank performance, highlighting the importance of managing liquidity risk effectively. These findings suggest that banks in the SADC region involved in cross-border mergers should reassess their risk management strategies and prioritise liquidity and credit risk management to improve performance and ensure operational sustainability in the SADC region.
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    Broad-Based Black Economic Empowerment Legislation’s (B-BBEE) Role in Evincing Financial Inclusion in South Africa's Banking Industry
    (University of the Witwatersrand, Johannesburg, 2024) Khomunala, Avhasei; Horne, Renee
    The study aims to analyse the social and economic transformation brought about by the Broad- Based Black Economic Empowerment (B-BBEE) Act 53 of 2003, as amended by Act 46 of 2013. This delves into the impacts of the Amended Financial Sector Code (FS Code) on the banking industry, particularly analysing the effects of the Empowerment Financing (FS600) and Access to Financial Services (FS700) elements. The first objective explores the intricacies of South Africa’s policy structures and historical backdrop of the country that could potentially impact the decision-making process of the financial industry when executing transformative initiatives. The second objective is to recognise the constraints impeding the achievement of financial inclusivity within the banking sector and evaluate the influence of the Broad-Based Black Economic Empowerment (B- BBEE) legislation in relation to the Amended FS Code with regards to the Banking industry . The research recommends a revision in the monitoring approach of the B-BBEE legislation in South Africa by drawing upon insights from international leaders and utilizing these discoveries to offer effective strategies for enhancing the involvement of marginalized communities. A quantitative research methodology was deployed by the extraction of secondary data for studying Bank’s financial inclusion initiatives and primary data through questionnaires disseminated to Beneficiaries of the two elements by means of targeting students of University of the Witwatersrand and professionals on LinkedIn. Through its quantitative assessment, descriptive statistics, Crosstabs, Chi-square analysis, and a summary of the results and explanation was provided. The comprehensive analysis of the South African Banking Industry as implementors of financial inclusion initiatives demonstrates significant advancements and positive trends. Furthermore, the dissertation normality tests, revealing significant departures from normal distribution assumptions for specific variables and residing area levels
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    Credit growth and its impact on profitability and liquidity in the local Banking Industry of South Africa and the United Kingdom
    (University of the Witwatersrand, Johannesburg, 2022) Pillay, Melissa Dianne; Van Wyk, Liandi; Gomez , Samantha
    The study aims to review the impact of credit growth on local bank profitability and liquidity in both South Africa (SA) and the United Kingdom (UK) between 2015 and 2020. A quantitative approach is used in the study, using descriptive statistics and panel regression analysis. The sample data were extracted from The Banker database; this is a key source of data and analysis for the world’s banking sector, South African Reserve Bank (SARB), Statistics SA, and Trading Economics. Explanatory variables for profitability in the panel regression analysis include return on average assets (ROAA), return on average equity (ROAE), total assets, equity assets, loan assets, cost- to-income, Gross Domestic Product (GDP) growth rate, Herfindahl-Hirschman Index (HHI), consumer price index (CPI), the interest rate on loans, interest rate margin (IRM), unemployment rates, and credit growth. Explanatory variables for liquidity in the panel regression include ROAE, total assets, equity assets, GDP growth rate, CPI, interest rate on loans (IRL), IRM, unemployment, and credit growth. The findings indicate that credit growth is insignificant for bank profitability and liquidity in SA and the UK, so no relationship exists. The main issue is not credit growth per se but the combination of high credit growth, low provisioning, and looser lending. Based on the findings, a negative relationship exists between cost-to-income and bank profitability, reflecting that a higher cost-to-income ratio does decrease bank profitability in both SA and the UK. Other variables for SA were statistically significant: equity assets, total assets, the cost-to-income ratio, and GDP growth rate. In the UK, the following other variables were statistically significant: loan assets, total assets, cost-to-income, GDP growth rate, HHI, ROAE, CPI, and IRM. Further research can focus on expanding the period and the countries reviewed to assess credit growth in more depth.
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    Political risk and bank capital structure in emerging market economies
    (2020) Mukwapatira, Arthur
    This paper shows that banks play a crucial role (resource allocation) in the functioning of every economy, more so for developing economies where capital markets are not well developed and, in some cases, non-existent. Drawing from existing literature, we show that capital structure is an important determinant of bank performance and that political risk influences the choice of how much and what sort of debt banks employ. We show that heightened political risk increases the cost of debt, especially long-term debt thereby influencing the amount of employed debt versus equity, that is, capital structure. This paper shows that, relative to developed economies, developing economies experience more political risk. Another important finding is that, contrary to common belief, banks do rely on non-deposit debt to finance their activities, to an extent that, factors such as political risk, that affect the availability and cost of debt, directly impact banks’ decisions, performance and efficiency. We precisely explain how capital structure affects performance and demonstrate the exact channels through which political risk influences the debt-equity mix.