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Basel III regulations and financing decisions of nonfinancial firms the South African evidence

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  • Tesfaye T Lemma
  • Michael Machokoto
  • Tendai Gwatidzo

Abstract

This study examines the impact of the Basel III regulatory framework on financing decisions within South Africas real sector. Using a sample of 2 045 firm-year observations spanning the years 20112015 and employing the difference-in-differences approach, we find a significant decrease in debt financing and debt maturity for firms deemed constrained relative to unconstrained firms in the post-Basel III implementation period. Further analyses suggest that the Basel III regulatory framework has a persistent effect on financing decisions in the real sector. Our findings indicate that the Basel III regulatory framework reduces leverage and debt maturity, especially for constrained firms.

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  • Tesfaye T Lemma & Michael Machokoto & Tendai Gwatidzo, 2024. "Basel III regulations and financing decisions of nonfinancial firms the South African evidence," Working Papers 11067, South African Reserve Bank.
    • Handle: RePEc:rbz:wpaper:11067
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