The Impact of Basel III Regulations on Bank’s Lending and Growth Rates in Kwa-Zulu Natal

The purpose of this study is to evaluate the impact of new capital requirements introduced under the Basel III regulations on banks’ lending rates and loan growth. The research also explores if the Basel III Accord results in a substantial decrease in the loan growth of the banking sector. Little research, if any, has been done on the new capital requirements.

A qualitative approach was followed, and 10 semi-structured interviews were conducted with credit managers and analyst using open ended questions to gather data on credit, interest rates and the cost of credit within the banking industry.  Major findings of the research were that banks have become stricter with credit lending and the consequence was that the loan growth decreased over the past five years.  The corresponding strategy for banks was to focus on the promotion of non-credit products to increase profitability.