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Do Positive Excess Capital Adequacy Ratio Shocks Influence the Income Inequality Dynamics in South Africa?

  • Eliphas Ndou
  • Thabo Mokoena
Chapter

Abstract

Evidence reveals that a positive excess CAR shock raises income inequality growth. Evidence from counterfactual analysis indicates that the actual decline in credit and GDP growth due to positive excess CAR shock exceeds those of the counterfactual responses. This suggests that increased income inequality growth following the positive excess CAR shocks exacerbates the decline in the real economic activity. From policy perspective, Perugini et. al (2015) suggests that policymakers should cast their nets wider than financial regulatory reforms and consider the effects of their policy changes on influencing the distributive patterns, which include income inequality.

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Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Eliphas Ndou
    • 1
    • 3
    • 4
  • Thabo Mokoena
    • 2
  1. 1.Economic Research DepartmentSouth African Reserve BankPretoriaSouth Africa
  2. 2.Department of Economic, Small Business Development, Tourism and Environmental AffairsFree State Provincial GovernmentBloemfonteinSouth Africa
  3. 3.School of Economic and Business SciencesUniversity of the WitwatersrandJohannesburgSouth Africa
  4. 4.Wits Plus, Centre for Part-Time StudiesUniversity of the WitwatersrandJohannesburgSouth Africa

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