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Financial and Corporate Structure in South Africa

Author

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  • McKenzie, Rex A

    (Kingston University London)

Abstract

Concentration in the South African financial sector has its origins in three main influences that are all historical (i) the legacy of domination by a small number of large imperial banks, (ii) the struggle between English and Afrikaner capital and (iii) the statutory legislation that framed the operation of banks. In this paper we describe the part played by these three historical influences in the formation and development of the corporate sector in South Africa. One recurrent theme throughout the history is the relative position of the foreign bank and domestic bank in the local market place. We take up this theme and argue that the scale and extent of foreign bank operations in South Africa is far greater than estimates provided by the local authorities. We have found that the main vehicle in deepening the concentration of the sector has been the merger. In later sections of the paper we lay out how the amalgamation by absorption approach to expansion that has been a constant feature of the country’s business life comes together with a merger frenzy in the late 1980’s and 1990s that succeeds in further deepening concentration within banking, finance and industry. Last, we end with an analysis of industry structure by Johannesburg Stock Exchange (JSE) capitalisation between 1994 and 2011.

Suggested Citation

  • McKenzie, Rex A, 2016. "Financial and Corporate Structure in South Africa," Economics Discussion Papers 2016-5, School of Economics, Kingston University London.
    • Handle: RePEc:ris:kngedp:2016_005
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    File URL: http://eprints.kingston.ac.uk/34682/1/2016_005.pdf
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    References listed on IDEAS

    as
    1. John Singleton & Grietjie Verhoef, 2010. "Regulation, deregulation, and internationalisation in South African and New Zealand banking," Business History, Taylor & Francis Journals, vol. 52(4), pages 536-563.
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    More about this item

    Keywords

    Banks; Concentration; Corporate Structure;
    All these keywords.

    JEL classification:

    • B15 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Historical; Institutional; Evolutionary
    • L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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