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Understanding South African Financial Markets

Published: 20-JUN-06

South African Reserve Bank governor, Tito Mboweni, lays the groundwork for the second edition of an essential and comprehensive work on the country’s financial markets thus:

“Over the last several years, South Africa has embarked on a structural transformation in many areas of the local financial landscape in order to comply fully with these imperatives, in the context of a democratic society. Nevertheless, much of the South African population is only now gaining affordable access to modern financial technology, and education therefore continues to be a priority in order to ensure effective participation at any desired level of engagement.”

Mboweni approves of the book in his foreword by applauding its “rigorous and up-to-date introduction to all of the key components of the South African financial system.”

No doubt the book will be useful not only to students, but also essential reading and a reference source academics, members of the financial and other business communities, and the general public alike. It examines all the major institutions of the local financial system, both regulators and commercial enterprises, as well as the jargon and instruments of the main underlying and derivative markets.

In a broadbrush appreciation of the work, Understanding South African Financial Markets gives the reader an overview of how the various institutions in the domestic financial system operate, as well as of the different financial markets and the instruments traded in those markets.

Some chapters have been written by practitioners from the financial markets and others by experienced faculty members in economics and financial management. The first edition, published three years ago, has undergone major revision in tune with the fast-changing pace of the South African financial sector. In particular, the regulatory framework is updated as adherence to strict standards of corporate governance is regarded as vital for sustainable development in all economic spheres.

Of interest is the discussion over South Africa’s duel economies. The domestic economy is unique in the sense that that a highly sophisticated developed economy and a relatively unsophisticated developing economy exist side by side. “Hence,” say the authors, “while the larger part of the book is aimed at describing the developed segment of the financial system, the chapter on the microfinance institutions is aimed at providing an overview of the more informal and largely unregulated segment of the financial sector that continues to provide essential financial services to the previously disadvantaged component of the South African population.”

The first edition examined the all-important micro-lending industry. In the second edition, the net is cast wider to include many more microfinance institutions, making this chapter particularly important “as little published material on the informal sector is currently available to the general public”, the authors maintain.

As Mboweni puts it: The book seeks “to combine the knowledge of those whose job it is to ‘see the wood from the trees’ in the ever-changing financial markets with that of erudite arbologists”.

Book Information

  • Author: Cecilia van Zyl, Ziets Botha & Peter Skerritt
  • Publishinger: Van Scaik
  • Review by: John Etkind

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