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G28

Financial Institutions and Services: Government Policy and Regulation

The effectiveness of counter-cyclical loan-to-value regulations: generic versus sector-specific rules

Guangling Liu and Thabang Molise
This paper considers the implications of the counter-cyclical loan-to-value (CcLTV) regulation in a setting where different types of borrowers from distinct sectors of the credit market co-exist. To identify the optimal policy design, we consider two macro-prudential policy regimes, nanely generic...
Aug 2019
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Macroprudential policy and foreign interest rate shocks: A comparison of different instruments and regulatory regimes

Chris Garbers and Guangling Liu
This paper presents a generic small open economy real business cycle model with banking and foreign borrowing. We incorporate capital requirements, reserve requirements, and loan-to-value (LTV) regulation into this framework, and subject the model to a positive foreign interest rate shock that...
Oct 2017
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Welfare analysis of bank capital requirements with endogenous default

Fernando Garcia-Barragan and Guangling Liu
This paper presents a tractable framework with endogenous default and evaluates the welfare implication of bank capital requirements. We analyze the response of social welfare to a negative technology shock under different capital requirement regimes with and without default. We show that including...
Jun 2017
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Can bank capital adequacy changes amplify the business cycle in South Africa?

Foluso Akinsola and Sylvanus Ikhide
Financial globalisation and financial innovation have increased most banks’ appetite for risk and therefore engendered financial fragility in the financial system. This paper examines the relationship between regulatory bank capital adequacy and the business cycle in South Africa using Vector error...
Feb 2017
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An Evaluation of the Cost and Revenue Efficiency of the Banking Sector in Zimbabwe

Sanderson Abel and Pierre Le Roux
The study was meant to evaluate the cost and revenue efficiency of the Zimbabwean banking sector during the period 2009-2014. The study employed the Data Envelopment Analysis and the Tobit Regression methods. The estimation of cost and revenue efficiency shows that revenue and cost efficiency...
Aug 2016
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Financial Reforms and the Finance – Growth Relationship in the Southern African Development Community (SADC)

Alex Bara, Gift Mugano & Pierre Le Roux
This study seeks to establish the casual relationship between financial development and economic growth in the SADC region, factoring-in the role of financial reforms. Utilising Generalised Methods of Moments (GMM) and Panel Fixed Effects estimations, the study established that financial...
Jun 2016
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The effectiveness of countercyclical capital requirements and contingent convertible capital: a dual approach to macroeconomic stability

Hylton Hollander
This paper studies the effectiveness of countercyclical capital requirements and contingent con vertible capital (CoCos) in limiting financial instability, and its associated influence on the real economy. To do this, I augment both features into a standard real business cycle framework with an...
Sep 2015
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Do Capital Requirements Affect Cost of Intermediation? Evidence from a Panel of South African Banks

Andrew Maredza
Since the 2007 sub-prime financial crisis, world bank capital ratios have increased. In this paper, we investigate the impact of increased bank capital requirements introduced under the Basel Accord framework on the costs of intermediation. We attempt to answer this central question by running...
Aug 2015
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