Browsing by Author "Ssebagala, Ralph"

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    Relieving consumer over-indebtedness: The need for a ‘fresh start’ in South Africa
    (2016-01) Ssebagala, Ralph
    Although the relative risks of consumer over-indebtedness can be identified, and to some extent prevented, the occurrence of unfortunate events beyond the market’s control means that some consumers will find themselves financially over-extended and suddenly incapable of paying their debts. Modern credit societies have noted this, and devised legal measures to relieve such consumers of their debt distress by discharging them of their problematic debts in order to offer them an opportunity to reclaim their financial health (the fresh start). In a context like South Africa, where households are not only highly leveraged but also highly exposed to idiosyncratic risk yet inadequately insured, such measures have never been more relevant. However, the available measures are not up to the challenge of providing meaning relief and rehabilitation of consumers. This paper attempts to show why, and proposes the implementation a simple, straightforward mechanism for debt discharge akin to the ‘fresh start’.
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    What matters more for South African households’ debt repayment difficulties?
    (2016-01) Ssebagala, Ralph
    While the increased access to consumer credit has helped many families improve their welfare, the rising repayment burdens upon a background of chronically law savings rate have generated concerns that South African families are becoming ever more financially fragile and less able to meet their consumer debt repayment obligations. Using data from the Cape Area Panel Study (CAPS), this paper investigates whether consumer debt repayment problems are better explained by excessive spending which leaves households financial overstretched or by negative income shocks. The results indicate that households are significantly more likely to be delinquent on their financial obligations when they suffer negative events beyond their control rather than due to the size of the expenditure burden. This suggests that some consumers will experience repayment problems even when they borrow within their means. Thus regulatory efforts to improve mechanisms for debt relief might be more meaningful than restrictions on lending.