Reassessing the Fisher Effect in South Africa: A Dynamic Bivariate and Time-Frequency Approach to Regional Disparities in Monetary Policy Transmission

This study investigates the determinants of banking financial stability in the G8 countries over the period (2004-2021), using the FGLS and MMQR estimation methods, while also applying a dynamic causality test to examine bidirectional and temporal relationships among the variables. The results indicate that bank-specific internal factors negatively affect stability, while higher market concentration combined with strong interbank linkages increases systemic risk. Economic policy uncertainty does not alter this relationship. The findings also show that financial inclusion raises operational complexity and risk exposure, although it becomes relatively safer in more concentrated banking markets and provides a modest buffering effect against policy volatility. Financial development contributes to improved stability, but its positive impact weakens under excessive competition, and economic uncertainty does not significantly influence this association. Governance quality strengthens banking stability, with a more pronounced effect in concentrated markets, while remaining unaffected by policy uncertainty. The study recommends reinforcing independent supervision, enhancing monitoring mechanisms, promoting secure digital transformation, restructuring operational models of large banks, and improving transparency and financial disclosure to support long-term banking stability.