South Africa: Financial System Stability Assessment
IMF Staff Country Reports, December 11, 2014
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- South Africa: Financial System Stability Assessment
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Bibliographic details
- Published: December 11, 2014
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484372005.002
Summary and context
- This paper discusses findings of the Financial System Stability Assessment for South Africa.
- South Africa’s financial sector operates in a challenging economic environment.
- Despite remarkable progress since the end of apartheid in 1994, South Africa still has one of the world’s highest unemployment and income inequality rates.
- Slow economic growth since 2008 has further aggravated unemployment.
- Real disposable income is stagnant, and households are heavily indebted.
- Relatively high capital buffers as well as sound regulation and supervision have helped mitigate the risks.
- Stress tests confirm the capital resiliency of banks and insurance companies to severe shocks but illustrate a vulnerability to liquidity shortfalls.
Major risks and vulnerabilities
- High unemployment and income inequality remain structural challenges.
- Protracted slow economic growth since 2008 increases financial sector strain.
- Stagnant real disposable income and high household indebtedness elevate credit risk.
- Liquidity risk: stress tests indicate vulnerability to liquidity shortfalls despite capital resiliency.
Stress testing and resilience findings
- Stress tests show:
- Capital resiliency of banks to severe shocks.
- Capital resiliency of insurance companies to severe shocks.
- Vulnerability to liquidity shortfalls (liquidity risk identified despite capital buffers).
Key topics and coverage
- Subject tags: Banking, Economic sectors, Financial institutions, Financial sector, Financial sector policy and analysis, Financial services, Insurance companies, Liquidity requirements, Nonbank financial institutions, Stress testing
- Keywords: Africa, asset, bank, bank conduit, banking assets, capital ratio, commercial paper, coverage ratio, CR, Financial sector, financial system, Global, information technology platform, Insurance companies, ISCR, Nonbank financial institutions, SARB, Stress testing, unit trust