The study explores the consequences of implementing the net stable funding ratio (NSFR) on lending practices by South African domestic banks. It breaks down total lending into categories based on customer type, such as corporate versus household, and various loan types, including instalments, mortgages, credit cards, overdrafts, and other loans. The aim is to consider different risk profiles and maturities spanning short-, medium-, and long-term lending.
Findings suggest that NSFR regulations in South Africa align closely with Basel III standards. Although overall lending levels remain unchanged, there has been a shift in loan composition and maturity profiles following the NSFR's introduction. Specifically, banks have increased their focus on short-term lending while reducing long-term loans, particularly residential mortgages. This trend is consistent with the NSFR's goal of limiting maturity transformation but may affect households' access to long-term credit.