What are the determinants of non-performing loans in Botswana?

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dc.contributor.advisorDe Jager, Phillipen_ZA
dc.contributor.authorTsumake, Gertrude Kgalaleloen_ZA
dc.date.accessioned2017-01-23T07:55:57Z
dc.date.available2017-01-23T07:55:57Z
dc.date.issued2016en_ZA
dc.description.abstractThe maintenance of asset quality, efficiency and profitability is a vital requirement for the survival and development of banks. Loans are the main asset class from which banks generate their major portion of income and also signify the greatest risk to banks. There has been significant indication that the financial crises in the USA, Sub-Saharan Africa and East Asia were signalled by high levels of non-performing loans (NPLs). Due to the detrimental effect that these loans have on a bank's revenue and the economic welfare of a country, it is essential to examine and investigate the determinants of NPLs in the banking industry of any country. This study examines Botswana, a developing country in Southern-Africa and is stimulated by the assumption that both the industry level variables and macroeconomic variables have an effect on NPLs. Secondary data of the banking sector was obtained from Botswana's central bank, the Bank of Botswana. Correlation and regression analysis were carried out over a period of ten years (2005-2014), using quarterly data. It was found that the following industry level variables (i.e. credit growth, industry size and profitability) and macroeconomic variables (i.e. real gross domestic product (GDP) growth, inflation, real interest rates and the unemployment rate) have a statistically significant impact on the NPL rate. On the other hand, capitalization and diversification had a statistically insignificant relationship with NPLs. The banking industry in Botswana should carefully monitor the household loan portfolio as well as their credit advancement policies with regard to the aforementioned variables to help lower their NPL ratios. This study is the first of its kind in the Botswana banking industry and therefore will provide scholars with the opportunity to enrich their knowledge and serve as a reference for other researchers in the related area while also providing a foundation for further studies.en_ZA
dc.identifier.apacitationTsumake, G. K. (2016). <i>What are the determinants of non-performing loans in Botswana?</i>. (Thesis). University of Cape Town ,Faculty of Commerce ,Department of Finance and Tax. Retrieved from http://hdl.handle.net/11427/22917en_ZA
dc.identifier.chicagocitationTsumake, Gertrude Kgalalelo. <i>"What are the determinants of non-performing loans in Botswana?."</i> Thesis., University of Cape Town ,Faculty of Commerce ,Department of Finance and Tax, 2016. http://hdl.handle.net/11427/22917en_ZA
dc.identifier.citationTsumake, G. 2016. What are the determinants of non-performing loans in Botswana?. University of Cape Town.en_ZA
dc.identifier.ris TY - Thesis / Dissertation AU - Tsumake, Gertrude Kgalalelo AB - The maintenance of asset quality, efficiency and profitability is a vital requirement for the survival and development of banks. Loans are the main asset class from which banks generate their major portion of income and also signify the greatest risk to banks. There has been significant indication that the financial crises in the USA, Sub-Saharan Africa and East Asia were signalled by high levels of non-performing loans (NPLs). Due to the detrimental effect that these loans have on a bank's revenue and the economic welfare of a country, it is essential to examine and investigate the determinants of NPLs in the banking industry of any country. This study examines Botswana, a developing country in Southern-Africa and is stimulated by the assumption that both the industry level variables and macroeconomic variables have an effect on NPLs. Secondary data of the banking sector was obtained from Botswana's central bank, the Bank of Botswana. Correlation and regression analysis were carried out over a period of ten years (2005-2014), using quarterly data. It was found that the following industry level variables (i.e. credit growth, industry size and profitability) and macroeconomic variables (i.e. real gross domestic product (GDP) growth, inflation, real interest rates and the unemployment rate) have a statistically significant impact on the NPL rate. On the other hand, capitalization and diversification had a statistically insignificant relationship with NPLs. The banking industry in Botswana should carefully monitor the household loan portfolio as well as their credit advancement policies with regard to the aforementioned variables to help lower their NPL ratios. This study is the first of its kind in the Botswana banking industry and therefore will provide scholars with the opportunity to enrich their knowledge and serve as a reference for other researchers in the related area while also providing a foundation for further studies. DA - 2016 DB - OpenUCT DP - University of Cape Town LK - https://open.uct.ac.za PB - University of Cape Town PY - 2016 T1 - What are the determinants of non-performing loans in Botswana? TI - What are the determinants of non-performing loans in Botswana? UR - http://hdl.handle.net/11427/22917 ER - en_ZA
dc.identifier.urihttp://hdl.handle.net/11427/22917
dc.identifier.vancouvercitationTsumake GK. What are the determinants of non-performing loans in Botswana?. [Thesis]. University of Cape Town ,Faculty of Commerce ,Department of Finance and Tax, 2016 [cited yyyy month dd]. Available from: http://hdl.handle.net/11427/22917en_ZA
dc.language.isoengen_ZA
dc.publisher.departmentDepartment of Finance and Taxen_ZA
dc.publisher.facultyFaculty of Commerceen_ZA
dc.publisher.institutionUniversity of Cape Town
dc.subject.otherFinancial and Risk Managementen_ZA
dc.titleWhat are the determinants of non-performing loans in Botswana?en_ZA
dc.typeMaster Thesis
dc.type.qualificationlevelMasters
dc.type.qualificationnameMComen_ZA
uct.type.filetypeText
uct.type.filetypeImage
uct.type.publicationResearchen_ZA
uct.type.resourceThesisen_ZA
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