Impact of the Basel IV framework on securitization and performance of commercial banks in South Africa
Securitization has been used as a tool for bank funding, liquidity, risk management, and performance for over two decades. However, securitization activities were negatively affected by the recent financial crises, which led to stricter regulations of banks’ off-balance-sheet activities. This study...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2020-08-01
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| Series: | Banks and Bank Systems |
| Subjects: | |
| Online Access: | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/13917/BBS_2020_03_Oyetade.pdf |
| _version_ | 1811325583739584512 |
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| author | Damilola Oyetade Adefemi A. Obalade Paul-Francois Muzindutsi |
| author_facet | Damilola Oyetade Adefemi A. Obalade Paul-Francois Muzindutsi |
| author_sort | Damilola Oyetade |
| collection | DOAJ |
| description | Securitization has been used as a tool for bank funding, liquidity, risk management, and performance for over two decades. However, securitization activities were negatively affected by the recent financial crises, which led to stricter regulations of banks’ off-balance-sheet activities. This study examined the possible impacts of the Basel IV capital requirements on securitization activities and the performance of commercial banks in South Africa if implemented. The study used aggregated financial data of selected South African commercial banks to create a sample representative projection as if the selected banks had implemented the Basel IV capital requirements between 2002 and 2018. The simulated data were analyzed and compared to Basel III data using panel data analysis under certain assumptions, while other conditions held constant. The results revealed that the implementation of the Basel IV capital requirements will have a significant positive impact on securitization activities of commercial banks in South Africa. However, higher capital requirements of Basel IV may have no significant impact on performance of securitizing banks but it can protect banks from securitization exposure. |
| first_indexed | 2024-04-13T14:36:03Z |
| format | Article |
| id | doaj.art-69a3b71171ae4ea58da8bc7ebc7cfae2 |
| institution | Directory Open Access Journal |
| issn | 1816-7403 1991-7074 |
| language | English |
| last_indexed | 2024-04-13T14:36:03Z |
| publishDate | 2020-08-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Banks and Bank Systems |
| spelling | doaj.art-69a3b71171ae4ea58da8bc7ebc7cfae22022-12-22T02:43:02ZengLLC "CPC "Business Perspectives"Banks and Bank Systems1816-74031991-70742020-08-011539510510.21511/bbs.15(3).2020.0913917Impact of the Basel IV framework on securitization and performance of commercial banks in South AfricaDamilola Oyetade0https://orcid.org/0000-0003-0120-5385Adefemi A. Obalade1https://orcid.org/0000-0001-9572-4092Paul-Francois Muzindutsi2https://orcid.org/0000-0002-4819-8218Ph.D. Candidate (Finance), School of Accounting, Economics and Finance, University of KwaZulu-NatalPostdoctoral Research Fellow (Finance), School of Accounting, Economics and Finance, University of KwaZulu-NatalAssociate Professor of Finance, School of Accounting, Economics and Finance, University of KwaZulu-NatalSecuritization has been used as a tool for bank funding, liquidity, risk management, and performance for over two decades. However, securitization activities were negatively affected by the recent financial crises, which led to stricter regulations of banks’ off-balance-sheet activities. This study examined the possible impacts of the Basel IV capital requirements on securitization activities and the performance of commercial banks in South Africa if implemented. The study used aggregated financial data of selected South African commercial banks to create a sample representative projection as if the selected banks had implemented the Basel IV capital requirements between 2002 and 2018. The simulated data were analyzed and compared to Basel III data using panel data analysis under certain assumptions, while other conditions held constant. The results revealed that the implementation of the Basel IV capital requirements will have a significant positive impact on securitization activities of commercial banks in South Africa. However, higher capital requirements of Basel IV may have no significant impact on performance of securitizing banks but it can protect banks from securitization exposure.https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/13917/BBS_2020_03_Oyetade.pdfbank riskBasel regulationsrisk-weighted assetssecuritization |
| spellingShingle | Damilola Oyetade Adefemi A. Obalade Paul-Francois Muzindutsi Impact of the Basel IV framework on securitization and performance of commercial banks in South Africa Banks and Bank Systems bank risk Basel regulations risk-weighted assets securitization |
| title | Impact of the Basel IV framework on securitization and performance of commercial banks in South Africa |
| title_full | Impact of the Basel IV framework on securitization and performance of commercial banks in South Africa |
| title_fullStr | Impact of the Basel IV framework on securitization and performance of commercial banks in South Africa |
| title_full_unstemmed | Impact of the Basel IV framework on securitization and performance of commercial banks in South Africa |
| title_short | Impact of the Basel IV framework on securitization and performance of commercial banks in South Africa |
| title_sort | impact of the basel iv framework on securitization and performance of commercial banks in south africa |
| topic | bank risk Basel regulations risk-weighted assets securitization |
| url | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/13917/BBS_2020_03_Oyetade.pdf |
| work_keys_str_mv | AT damilolaoyetade impactofthebaselivframeworkonsecuritizationandperformanceofcommercialbanksinsouthafrica AT adefemiaobalade impactofthebaselivframeworkonsecuritizationandperformanceofcommercialbanksinsouthafrica AT paulfrancoismuzindutsi impactofthebaselivframeworkonsecuritizationandperformanceofcommercialbanksinsouthafrica |