A review of the actuaries' capitalisation rate from an economic perspective
- Authors: Turner, Jason
- Date: 2006
- Subjects: Macroeconomics , Keynesian economics , Insurance -- Mathematics , South Africa -- Economic conditions -- 1961-1991 , South Africa -- Economic policy
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:992 , http://hdl.handle.net/10962/d1002727 , Macroeconomics , Keynesian economics , Insurance -- Mathematics , South Africa -- Economic conditions -- 1961-1991 , South Africa -- Economic policy
- Description: The purpose of this paper was to evaluate if the macroeconomic change that has occurred in the South African economy since the 1980s has been significant enough to justify a re-examination of the actuaries’ capitalisation rate, due to its formulation processes dependence on the macroeconomic situation. The need for the reexamination arises from the use of the capitalisation in the calculation of lump sum awards where even a small change in the rate can have a significant impact on the value of the final award. In order to address the issue an examination of how Keynesian expectations are formulated and an examination of the Government’s macroeconomic policy was conducted to provide the foundation. On this foundation, a trend analysis of the major groups of financial instruments, as well as the current outlooks for the South African economy, was conducted to determine if there was any indication of a significant change in the macroeconomic conditions. The results of the analysis provided a compelling case for the urgent need for the actuaries’ capitalisation rate to be recalculated to account for the changed economic situation.
- Full Text:
- Date Issued: 2006
- Authors: Turner, Jason
- Date: 2006
- Subjects: Macroeconomics , Keynesian economics , Insurance -- Mathematics , South Africa -- Economic conditions -- 1961-1991 , South Africa -- Economic policy
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:992 , http://hdl.handle.net/10962/d1002727 , Macroeconomics , Keynesian economics , Insurance -- Mathematics , South Africa -- Economic conditions -- 1961-1991 , South Africa -- Economic policy
- Description: The purpose of this paper was to evaluate if the macroeconomic change that has occurred in the South African economy since the 1980s has been significant enough to justify a re-examination of the actuaries’ capitalisation rate, due to its formulation processes dependence on the macroeconomic situation. The need for the reexamination arises from the use of the capitalisation in the calculation of lump sum awards where even a small change in the rate can have a significant impact on the value of the final award. In order to address the issue an examination of how Keynesian expectations are formulated and an examination of the Government’s macroeconomic policy was conducted to provide the foundation. On this foundation, a trend analysis of the major groups of financial instruments, as well as the current outlooks for the South African economy, was conducted to determine if there was any indication of a significant change in the macroeconomic conditions. The results of the analysis provided a compelling case for the urgent need for the actuaries’ capitalisation rate to be recalculated to account for the changed economic situation.
- Full Text:
- Date Issued: 2006
Financial reforms and interest rate spreads in the commercial banking sector in Kenya
- Authors: Munene, Daniel
- Date: 2006
- Subjects: Finance -- Kenya , Banks and banking -- Kenya , Economics -- Kenya , Interest rates -- Kenya , Economic development -- Kenya
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:1070 , http://hdl.handle.net/10962/d1007711 , Finance -- Kenya , Banks and banking -- Kenya , Economics -- Kenya , Interest rates -- Kenya , Economic development -- Kenya
- Description: Financial reforms were a major component of structural adjustment programs deemed necessary for developing countries in the mid 1980s. These were not only meant to improve the sector, but would ultimately enhance economic growth and help in poverty alleviation. At the top of these reforms was financial liberalisation. Kenya, like many other sub-Saharan African countries, undertook financial liberalisation in 1991, one of the measures was decontrolling interest rates. With market driven interest rates in place it was assumed that there would be increased efficiency in bank lending, as well as growth in credit availability as deposits increased. A key indicator of this improved intermediation process would be a narrowing interest rates spread, that is, the margin between the deposit and lending rate. Paradoxically, however, the expected benefits of these reforms did not accrue to Kenya's banking sector. This study focuses on financial reforms and the spread of interest rates in Kenya's banking sector. Using a trend analysis, spanning the period before and after liberalisation, interest rates spread are shown to have escalated dramatically upwards after liberalisation. An analysis of three macroeconomic variables, namely, the exchange rate, inflation rate and economic growth offer little, or inconclusive evidence, that they were the main causes of the wide interest rate spread. In fact, the spread is closely linked to institutional/structural factors such as non-competitiveness in the banking sector, imprudent lending practices and poor and/or inadequate banking supervision. Policies for improving the institutional infrastructure and thus moderating the spreads are highlighted.
- Full Text:
- Date Issued: 2006
- Authors: Munene, Daniel
- Date: 2006
- Subjects: Finance -- Kenya , Banks and banking -- Kenya , Economics -- Kenya , Interest rates -- Kenya , Economic development -- Kenya
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:1070 , http://hdl.handle.net/10962/d1007711 , Finance -- Kenya , Banks and banking -- Kenya , Economics -- Kenya , Interest rates -- Kenya , Economic development -- Kenya
- Description: Financial reforms were a major component of structural adjustment programs deemed necessary for developing countries in the mid 1980s. These were not only meant to improve the sector, but would ultimately enhance economic growth and help in poverty alleviation. At the top of these reforms was financial liberalisation. Kenya, like many other sub-Saharan African countries, undertook financial liberalisation in 1991, one of the measures was decontrolling interest rates. With market driven interest rates in place it was assumed that there would be increased efficiency in bank lending, as well as growth in credit availability as deposits increased. A key indicator of this improved intermediation process would be a narrowing interest rates spread, that is, the margin between the deposit and lending rate. Paradoxically, however, the expected benefits of these reforms did not accrue to Kenya's banking sector. This study focuses on financial reforms and the spread of interest rates in Kenya's banking sector. Using a trend analysis, spanning the period before and after liberalisation, interest rates spread are shown to have escalated dramatically upwards after liberalisation. An analysis of three macroeconomic variables, namely, the exchange rate, inflation rate and economic growth offer little, or inconclusive evidence, that they were the main causes of the wide interest rate spread. In fact, the spread is closely linked to institutional/structural factors such as non-competitiveness in the banking sector, imprudent lending practices and poor and/or inadequate banking supervision. Policies for improving the institutional infrastructure and thus moderating the spreads are highlighted.
- Full Text:
- Date Issued: 2006
- «
- ‹
- 1
- ›
- »