| Summary: | Thesis (PhD)--Stellenbosch University, 1997. === ENGLISH ABSTRACT: Standard financial literature contains various explanations for the unique role of
deposit-taking intermediaries in an economy. None of these reasons adequately
explains the extensive degree of banking regulation evident in practice.
The nature of a deposit, which guarantees capital repayment independent of bank
performance, uniquely incentivises banks to be exposed to financial risks. In the
absence of appropriate regulation, banks may be tempted to assume an
unacceptably high level of risk that could ultimately result in bank failure. Thus, the
regulation of banking risks is justified in terms of the public interest theory whereby
banking regulation seeks to avoid the market imperfections arising from informational
asymmetries and "domino" externalities associated with bank failure. Accordingly, the
rationale of banking regulation lies in the protection of consumers and in preserving
the stability of the financial system. Direct monetary controls, on the other hand,
impact adversely on the risk-management activities of banks.
The framework utilised to analyse and compare banking regulation consists of three
broad categories namely: preventative regulation, protective regulation and monetary
requirements.
Preventative or prudential regulation is aimed at managing the levels of risks
assumed by banks. This form of regulation relates to entry requirements; limitations
on certain business activities; the disclosure of risk-related information; the adequacy
of capital resources; portfolio restrictions on risk assets; and the sufficiency of
liquidity.
Protective regulation is concerned with the immediate protection of depositors and
maintenance of overall financial stability once a bank has failed. lt consists of crisis
management measures and deposit insurance schemes.
Direct, and hence inappropriate, monetary requirements are variations in reserve
asset requirements, as well as interest rate and credit controls.
The banking systems of South Africa, the United Kingdom and Germany were
chosen to perform a comparative analysis of financial regulation.
The London financial markets are mature and a large variety of banks are regulated
in a flexible manner by the Bank of England. By contrast, the strictly regulated
German banks dominate their domestic financial system. South Africa is a hybrid of
the former systems with a modern banking industry operating in well developed
financial markets and supervised according to advanced risk-management
considerations.
The analysis of preventative and protective regulation in all three financial systems
indicates that banking regulation is indeed concerned with the regulation of banking risks. The efforts of the Bank for International Settlements to harmonise regulation
across domestic financial systems has contributed significantly to improved
regulatory techniques for the management of these risks. None of the three systems
make use of direct monetary requirements which suggest awareness of the costs
associated with such regulation.
A number of recommendations are made to improve financial regulation in South
Africa: extension of regulatory coverage to include other types of financial
intermediaries who also engage in risky activities; further relaxation of exchange
control regulations which restrict the foreign exchange risk management; the
adoption of a formal deposit protection scheme; increased consolidated supervision
by a single regulatory authority with executive powers; further deregulatory measures
in instances where regulations are not appropriate from a risk-management
perspective; and re-regulation to the extent that the risk-management activities can
be regulated more efficiently. === AFRIKAANSE OPSOMMING: Die finansiele literatuur bevat verskeie verklarings vir die unieke rol wat
depositonemende instellings in 'n ekonomie vervul. Geeneen van die redes verskaf
'n bevredigende verklaring vir die wye omvang van bankregulasies in die praktyk nie.
Die aard van 'n deposita is sodanig dat die terugbetaling van die kapitaalsom deur 'n
bank gewaarborg word, onafhanklik van die winsprestasie van die bank. Gevolglik
het banke die unieke eienskap om hulself aan finansiele risikos bloat te stel. Sander
gepaste regulering sou banke moontlik daartoe geneigd wees om oormatige hoe
risikovlakke na te streef wat tot bankmislukking kan lei. Die regulering van
bankrisikos vind dus bestaansreg in die teorie van openbare belang, d.w.s. dat
regulering die potensiele markmislukkings, wat voortspruit uit asimmetriese inligting
en "domino" eksternaliteite, kan voorkom. Die rasionaal van bankregulering is die
beskerming van verbruikers, asook die handhawing van 'n stabiele finansiele stelsel.
Direkte monetere beheermaatreels, daarenteen, het 'n ongunstige uitwerking op die
bestuur van risikos deur banke.
Die raamwerk waarbinne bankregulering ontleed en vergelyk word, bestaan uit drie
kategoriee, naamlik voorkomende regulering, beskermende regulering en monetere
vereistes.
Voorkomende regulering is daarop gemik om die risikos waaraan banke blootgestel
is te bestuur. Sodanige regulering verwys na toelatingsvereistes, beperkings op
sekere sake-aktiwiteite, die openbaarmaking van risiko-verwante inligting, die
toereikendheid van kapitaalhulpbronne, beperkings ten opsigte van baterisikos en
voldoende likiditeit.
Beskermende regulering is gemoeid met die beskerming van deposante en bestaan
uit krisisbeheermaatreels en depositoversekeringskemas.
Direkte (en gevolglik ontoepaslike) monetere vereistes bestaan uit veranderlike
reserwebatevereistes, asook rentekoers- en kredietbeheermaatreels.
Die bankstelsels van Suid Afrika, die Verenigde Koningkryk en Duitsland is gekies vir
'n vergelykende analise van finansiele regulering.
Die finansiele markte in Londen is hoogs ontwikkeld en 'n groat verskeidenheid en
aantal banke word op 'n pragmatiese wyse deur die Bank of England gereguleer. In
direkte teenstelling daarmee word die Duitse banke, wat hul binnelandse finansiele
markte domineer, onderwerp aan 'n streng formele toesighoudingstelsel. Die SuidAfrikaanse
finansiele stelsel bevat elemente van beide bogenoemde stelsels, by
wyse van 'n moderne banksektor, wat funksioneer in goed ontwikkelde finansiele
markte en gereguleer word ooreenkomstig gevorderde risikobestuursbeginsels.
Die analise van voorkomende en beskermende regulering in die drie finansiele
stelsels, bevestig dat bankregulering inderdaad afgestem is op die regulering van finansiele risikos. Die pogings van die Bank van lnternasiona~e Vereffeninge om die
regulasies in finansiele stelsels internasionaal met mekaar in orreenstemming te
bring het wesenlik hiertoe bygedra. Die vermyding van direkte monetere vereistes
dui verder daarop dat toesighoudende owerhede bewus is van die nadele van
sodanige regulering.
'n Aantal aanbevelings word gemaak, naamlik: meer omvattende regulering ten
einde ander finansiele instellings wat ook finansiele risikos bestuur, te dek; verdere
verslappings van valutabeheermaatreels wat tans die bestuur van wisselkoersrisiko
beperk; die totstandkoming van 'n formele depositoversekeringstelsel; 'n groter mate
van gekonsolideerde toesighouding; verdere deregulering in gevalle waar regulasies
vanuit 'n risikobestuursoogpunt nie wenslik is nie; en her-regulering in die mate
waartoe die risikobestuurspraktyke meer effektief gereguleer kan word.
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