This study investigates the effects of the Basel III regulatory framework on financing decisions within South Africa's real sector. The research utilizes a sample of 2,045 firm-year observations from 2011 to 2015 and applies the difference-in-differences approach.
The findings reveal a notable reduction in debt financing and debt maturity for firms classified as "constrained" compared to "unconstrained" firms following the implementation of Basel III. Additional analyses indicate that the Basel III regulations have a lasting impact 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."