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The impact of Basel III implementation on bank lending in South Africa

journal contribution
posted on 2025-05-07, 11:09 authored by Xolani Sibande, Alistair MilneAlistair Milne
This study investigates the impact of the Basel III capital requirement on the supply of bank credit in South Africa. The literature offers greatly varying estimates of the impact of bank capital requirements on loan supply. Using a specification closely modelled on a related study of Peru, we report panel regressions using monthly balance sheet data for the four biggest banks in South Africa. We distinguish between three different categories of bank lending for household and corporate borrowers and report complementary local projection estimates to capture dynamic impacts. We find little evidence that the introduction of higher capital requirements under Basel III has reduced the supply of bank credit in South Africa. We surmise that this is mainly due to the large banks being well capitalised and operating with capital buffers that are larger than regulatory minimum requirements.

Funding

This work was supported by South African Reserve Bank

History

School

  • Loughborough Business School

Published in

South African Journal of Economics

Volume

93

Issue

1

Pages

6 - 26

Publisher

Wiley

Version

  • AM (Accepted Manuscript)

Rights holder

© Economic Society of South Africa

Publisher statement

This is the peer reviewed version of the following article: Sibande, X. and Milne, A. (2025), The Impact of Basel III Implementation on Bank Lending in South Africa. S Afr J Econ, 93: 6-26. https://doi.org/10.1111/saje.12398, which has been published in final form at https://doi.org/10.1111/saje.12398. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.

Acceptance date

2025-01-12

Publication date

2025-02-17

Copyright date

2025

ISSN

0038-2280

eISSN

1813-6982

Language

  • en

Depositor

Prof Alistair Milne. Deposit date: 15 April 2025

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