A Critical Assessment of Basel III and its Implications on the Mauritian Banking Sector

A Critical Assessment of Basel III and its Implications on the Mauritian Banking Sector

Author: 
Ramlall, Indranarain
Place: 
Oxon
Publisher: 
Taylor & Francis Group
Date published: 
2017
Record type: 
Responsibility: 
Mqomboti, Sakhile, jt. author
Journal Title: 
Journal of African Business
Source: 
Journal of African Business, Vol 18, No. 1, January-March 2017, pp. 50-70
Abstract: 

This paper probes into the application of Basel III in Mauritius. Findings show that although Mauritian banks are well-capitalized and carry excess liquidity, they will have to restructure their balance sheets by incorporating highly liquid assets such as government securities. While Basel III will foster greater financial stability, this will translate into lower supply of credit, higher cost of credit and lower returns with potential strains on SME lending. Similarly, Bank of Mauritius's ability to control credit growth will be hindered because banks' existing leverage ratios are already higher than the stipulated minimum leverage ratio of 3%. To harness the full benefits of the reforms, additional measures tailored to the specificities of the Mauritian economy will be needed. Other challenges prevail like establishing robust data management, risk methodologies, reporting systems and IT architecture as well as identifying the timing and the size of the Countercyclical Capital Buffer. Local banks anticipate Basel IV in the coming years as a refined tool.

Language: 
Country focus: 

CITATION: Ramlall, Indranarain. A Critical Assessment of Basel III and its Implications on the Mauritian Banking Sector . Oxon : Taylor & Francis Group , 2017. Journal of African Business, Vol 18, No. 1, January-March 2017, pp. 50-70 - Available at: http://library.au.int/critical-assessment-basel-iii-and-its-implications-mauritian-banking-sector