Original Research

The effects of the National Credit Act and the global financial crisis on domestic credit extension: Empirical evidence from South Africa

Chimwemwe Chipeta, Douglas Mbululu
Journal of Economic and Financial Sciences | Vol 5, No 1 | a314 | DOI: https://doi.org/10.4102/jef.v5i1.314 | © 2018 Chimwemwe Chipeta, Douglas Mbululu | This work is licensed under CC Attribution 4.0
Submitted: 28 June 2018 | Published: 30 April 2012

About the author(s)

Chimwemwe Chipeta, School of Economic and Business Sciences, University of the Witwatersrand, South Africa
Douglas Mbululu, School of Economic and Business Sciences, University of the Witwatersrand, South Africa

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This paper examines the impact of the new National Credit Act (NCA) No. 34 of 2005 and the global financial crisis on credit extension provided by all monetary institutions in South Africa. The econometric approach is estimated by way of ordinary least squares while controlling for several macroeconomic factors. The findings indicate that there was a general increase in the consumer credit provision in the period subsequent to the full implementation of the Act. The promulgation of the Act increases credit card, bank overdrafts, other conventional loans and total credit to the private sector categories. The implementation of the Act fails to reverse this trend but exerts a negative influence on lease finance and the global financial crisis has significant negative effects on most of the credit provision categories. The paper seeks to investigate an under-researched area on the interrelatedness of credit provider regulation, financial crises and credit extension.


National Credit Act; bank credit regulation; macroeconomic effects; exchange rates; global financial crisis; GDP; inflation; interest rates


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1. The credit consumption pattern in South Africa: A trend analysis
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