Development of the South African monetary banking sector and money market

Patel, Aadil Suleman (2004) Development of the South African monetary banking sector and money market. Masters thesis, Rhodes University.




This thesis presents a theoretical analysis of developments in the South African monetary banking sector and money market. In the first section, evolution of the political, social and economic environments over the past few decades are discussed to provide the reader with an idea of some factors responsible for the underdeveloped nature of this market. It has been argued that the domestic political and economic landscape is relatively stable. Nevertheless, factors such as Zimbabwe’s political and ensuing economic turmoil, coupled with numerous financial crises in other developing nations have had negative consequences on domestic financial market development and economic growth. The current state of monetary policy is also analysed, within the economic environment, and various policy considerations have been put forth concerning the inflation targeting policy. The thesis then goes on to scrutinise the statutory and institutional environments within which the monetary banking institutions operate. Recent changes in the regulations governing the operations of these institutions are identified, together with the consequences of such laws on banking institutions and possible amendments have been suggested. In particular, a system of Asset Based Reserve Requirements (ABRR) has been recommended, in place of the current cash reserve requirement, to ensure regulators create a level playing field in the financial sector. The system can also provide authorities with the necessary control required to direct funds to the most desirable sectors of the economy. Development of the interbank market and the effect of reduced banking competition on the efficacy of the South African Reserve Bank’s refinancing operations and inflation targeting policy are also considered. Finally, the thesis analyses some effects of financial development on the South African economy, and whether it is in the best interests of the country to pursue financial reforms with such vigour. While financial development may bring South Africa closer to international standards of best practice, the timing and extent of the reforms will be critical to guarantee success.

Item Type:Thesis (Masters)
Uncontrolled Keywords:South African Reserve Bank, Banks and banking, South Africa, Money market, Economic development, Monetary policy, Financial institutions
Subjects:H Social Sciences > HC Economic History and Conditions
Divisions:Faculty > Faculty of Commerce > Economics and Economic History
ID Code:2805
Deposited By: Ms Chantel Clack
Deposited On:11 May 2012 06:06
Last Modified:11 May 2012 06:06
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