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The impact of the change from Basel II to Basel III on the profitability of the South African banking sector
The objective of this study is to analyse the impact of the change from Basel II to Basel III on the profitability of the South African banking sector. South African banks are regulated in accordance with the Basel Accords and, as such, this study reviews the literature on bank regulation and specif...
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| Format: | Thesis |
| Language: | English |
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Department of Finance and Tax
2018
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| _version_ | 1867613811682312192 |
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| access_status_str | Open Access |
| author | Sadien, Ebrahim |
| author2 | de Jager, Phillip |
| author_browse | Sadien, Ebrahim de Jager, Phillip |
| author_facet | de Jager, Phillip Sadien, Ebrahim |
| author_sort | Sadien, Ebrahim |
| collection | Thesis |
| description | The objective of this study is to analyse the impact of the change from Basel II to Basel III on the profitability of the South African banking sector. South African banks are regulated in accordance with the Basel Accords and, as such, this study reviews the literature on bank regulation and specifically the evolution of the Basel Accords. The 2008 global financial crisis exposed certain flaws in the global regulatory framework and paved the way for the introduction of Basel III, of which South Africa commenced implementation on 1 January 2013. As mentioned, the review of banking regulation literature will specifically focus on the changes from Basel II to Basel III, with a further focus on two of the key changes introduced by Basel III: the capital requirement amendments and the new liquidity ratios. The study examines the top five banks in South Africa, as these make up 91.1% of the industry's banking assets (as of December 2012). The top five banks are used to create a representative bank of the South African banking sector and an accounting model is performed using a DuPont analysis in order to measure profitability. With respect to the Basel III capital changes, the results show that a 2% increase in capital by increasing the equity-to-asset ratio and all else held equal will result in a decrease of 0.29% in return on equity (ROE) for the South African banking sector. With respect to the Basel III liquidity measures, a 25 basis decrease in maturity transformation, all else held equal, will translate into a 3.38% decrease in ROE. The study contributes to the recent literature on Basel III and profitability. The results will also benefit the South African banking industry and regulators when assessing the profitability impact of the new Basel regulations. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/27387 |
| institution | University of Cape Town (South Africa) |
| language | eng |
| last_indexed | 2026-06-10T12:42:05.167Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2018 |
| publishDateRange | 2018 |
| publishDateSort | 2018 |
| publisher | Department of Finance and Tax |
| publisherStr | Department of Finance and Tax |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/27387 The impact of the change from Basel II to Basel III on the profitability of the South African banking sector Sadien, Ebrahim de Jager, Phillip Financial Management The objective of this study is to analyse the impact of the change from Basel II to Basel III on the profitability of the South African banking sector. South African banks are regulated in accordance with the Basel Accords and, as such, this study reviews the literature on bank regulation and specifically the evolution of the Basel Accords. The 2008 global financial crisis exposed certain flaws in the global regulatory framework and paved the way for the introduction of Basel III, of which South Africa commenced implementation on 1 January 2013. As mentioned, the review of banking regulation literature will specifically focus on the changes from Basel II to Basel III, with a further focus on two of the key changes introduced by Basel III: the capital requirement amendments and the new liquidity ratios. The study examines the top five banks in South Africa, as these make up 91.1% of the industry's banking assets (as of December 2012). The top five banks are used to create a representative bank of the South African banking sector and an accounting model is performed using a DuPont analysis in order to measure profitability. With respect to the Basel III capital changes, the results show that a 2% increase in capital by increasing the equity-to-asset ratio and all else held equal will result in a decrease of 0.29% in return on equity (ROE) for the South African banking sector. With respect to the Basel III liquidity measures, a 25 basis decrease in maturity transformation, all else held equal, will translate into a 3.38% decrease in ROE. The study contributes to the recent literature on Basel III and profitability. The results will also benefit the South African banking industry and regulators when assessing the profitability impact of the new Basel regulations. 2018-02-07T09:15:22Z 2018-02-07T09:15:22Z 2017 Master Thesis Masters MCom http://hdl.handle.net/11427/27387 eng application/pdf Department of Finance and Tax Faculty of Commerce University of Cape Town |
| spellingShingle | Financial Management Sadien, Ebrahim The impact of the change from Basel II to Basel III on the profitability of the South African banking sector |
| thesis_degree_str | Master's |
| title | The impact of the change from Basel II to Basel III on the profitability of the South African banking sector |
| title_full | The impact of the change from Basel II to Basel III on the profitability of the South African banking sector |
| title_fullStr | The impact of the change from Basel II to Basel III on the profitability of the South African banking sector |
| title_full_unstemmed | The impact of the change from Basel II to Basel III on the profitability of the South African banking sector |
| title_short | The impact of the change from Basel II to Basel III on the profitability of the South African banking sector |
| title_sort | impact of the change from basel ii to basel iii on the profitability of the south african banking sector |
| topic | Financial Management |
| url | http://hdl.handle.net/11427/27387 |
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