Financial Sector

The document examines the negative impact of 'financialisation' in South Africa, where the growth of the financial sector has outpaced GDP and diverted funds from real investment. It proposes a series of interventions to shift bank lending, lower the cost of finance, stabilise volatile capital flows through controls and taxes, and reduce the corporate focus on shareholder value maximisation to stimulate GDP growth and employment.

• The South African financial sector has expanded significantly over two decades, with growth in capital stock and Gross Value Added (GVA) exceeding GDP growth rates, yet this expansion has not clearly enhanced job creation.
• Financialisation is identified as a driver of reduced investment in the real economy and an exacerbator of poverty and inequality, potentially caused by the diversion of funds into financial products and the movement of highly skilled professionals into the financial sector.
• To stabilise financial flows and reduce short-term speculative activity, the document proposes implementing capital controls, such as 'Tobin taxes' on transactions, minimum stay requirements, and unremunerated reserve requirements (URR).
• The brief suggests reducing the focus on 'shareholder value maximisation' by banning share buybacks, restricting share-based executive pay, and increasing wealth taxes to encourage long-term investment.
• Proposed interventions to make finance cheaper include reducing the high interest rate spread in South Africa and increasing government funding for quasi-state institutions like the Industrial Development Corporation (IDC) and Development Bank of Southern Africa (DBSA).

APA

Institute for Economic Justice (2018). Financial Sector. https://iej.org.za/wp-content/uploads/2020/07/Stream-1-Policy-Brief-3-Financial-Sector.pdf

Chicago

Institute for Economic Justice. Financial Sector. 2018. https://iej.org.za/wp-content/uploads/2020/07/Stream-1-Policy-Brief-3-Financial-Sector.pdf.

Wikipedia

{{cite report |author=Institute for Economic Justice |title=Financial Sector |date=August 2018 |url=https://iej.org.za/wp-content/uploads/2020/07/Stream-1-Policy-Brief-3-Financial-Sector.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{instituteforeconomicjustice2018financial, author = {{Institute for Economic Justice}}, title = {{Financial Sector}}, institution = {Institute for Economic Justice}, year = {2018}, month = aug, url = {https://iej.org.za/wp-content/uploads/2020/07/Stream-1-Policy-Brief-3-Financial-Sector.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }