Edited by Stuart Jones
Chapter 8: The financial sector, 1970-2000
15580_DeclineSAfrica/Chap8 31/5/02 12:57 pm Page 1 8. 8.1 The financial sector, 1970-2000 Stuart Jones INTRODUCTION In the last third of the twentieth century major developments occured in the financial sector, when both the functions and ownership of traditional institutions were transformed. Market forces were the driving force behind these changes, technology the instrument that made them possible and determined their timing. These 30 years may accordingly be divided into two periods, the years of comparatively little change from 1970 to 1990 and the years of more rapid change from 1990 to 2000. In the first period, banks, building societies and insurance companies continued along their traditional paths. In the face of declining real per capita incomes there was little pressure to innovate, though the growth of the previous decade made possible a functioning money market and an increase in the number of merchant banks. The commercial banks were also impinging more and more upon the traditional business of the building societies, and these changes in their functions, accentuated by the development of wholly-owned merchant banking and hire purchase subsidiaries led to changes in their structure. Bank holding companies became the norm. Life insurance companies were also increasingly making loans to their policy holders and looking for new ways to employ their assets, the most spectacular of which was the development of shopping centres and the most far-reaching, the ownership of the commercial banks. Tight exchange controls were responsible for many of these developments at a time of sustained...
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