- Title
- The effects of sovereign credit rating on the banking sector in South Africa
- Creator
- Makhetha-Kosi, Palesa
- Subject
- Prime rate
- Subject
- South Africa -- Banking institutions
- Subject
- Credit ratings
- Date Issued
- 2022-04
- Date
- 2022-04
- Type
- Master's theses
- Type
- text
- Identifier
- http://hdl.handle.net/10948/57809
- Identifier
- vital:58267
- Description
- The study investigated the effect of sovereign credit rating on the banking sector in South Africa. Four different models with different measures of the banking sector were used to investigate this effect. In the first model Tobit model was used to analyse the effect of sovereign credit rating on bank ratings in South Africa. The study found that sovereign credit ratings have a significant positive effect on bank credit ratings. Using GMM with a sample of 11 banks, with bank lending as the measure for the banking sector, the study found that sovereign credit ratings (SCR) have a positive and significant effect on bank lending by commercial banks in South Africa. The study also used net interest margin, a measure for bank profitability as a third proxy for the banking sector and found that sovereign credit ratings have a significant positive effect on bank profitability. Furthermore, the study used bank stability measured by Z-Score to assess the effect of sovereign credit rating on the banking sector in South Africa. Taking a different approach and using ARDL, the study found that SCR has a positive long-run relationship with Z-Score. Based on the findings in all four models, the study concluded that the sovereign credit rating has a positive and significant effect on the banking sector in South Africa. This means that the sovereign credit ratings upgrade will lead to an improvement in the banking sector. A sovereign credit rating downgrade will be detrimental to the banking sector in South Africa. The study has shown that there are interlinkages between the public and the private sector; therefore, government must come up with strategic policies to ensure stability and reduction of government debt. Policymakers of the banking sector should also strengthen policies that will ensure banks remain profitable and stable even during a sovereign crisis. An effective and efficient asset management is important for the survival of South African commercial banks. The study recommends that both the private and public sector should work in cooperation when formulating policies so that the impact of the regulatory measure on commercial banks is taken into consideration.
- Description
- Thesis (PhD) -- Faculty of Business and Economic science, 2022
- Format
- computer
- Format
- online resource
- Format
- application/pdf
- Format
- 1 online resource (xiii, 207 pages)
- Format
- Publisher
- Nelson Mandela University
- Publisher
- Faculty of Business and Economic science
- Language
- English
- Rights
- Nelson Mandela University
- Rights
- All Rights Reserved
- Rights
- Open Access
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Collections
NMU School for Economics, Development and Tourism
| Thumbnail | File | Description | Size | Format | |||
|---|---|---|---|---|---|---|---|
| View Details Download | SOURCE1 | Makhetha-Kosi, P.pdf | 3 MB | Adobe Acrobat PDF | View Details Download |