The economic impact of the Troubled Assets Relief Programme (TARP) in the USA: an assessment of the level to which an optimal allocation of funds occurred

The 2009 international fi nancial crisis has led to many countries,including the USA, bailing out their fi nancial institutions. Thisarticle provides a unique perspective of the bailout issue by lookingat the impact of the quantitative easing in monetary policy oncompetitiveness as well as providing multiplier impacts through theuse of the US 2002 I-O table. Specifi cally, three areas are consideredwithin this model: whether the Troubled Assets Relief Programme(TARP)1 bailout will give rise to greater economic effi ciencies andproductivity, which would include determining whether the TARPbailouts give rise to the survival of fi nancial institutions and thestabilisation of the fi nancial sector; determining the direct, indirectand induced impacts of the TARP bailout on the economy (shortterm);and determining the long-term benefi ts of the TARP 1 bailouton the economy (by focusing on long-term capital realisation). Thefi ndings of this econometric analysis raise questions of the validityof government intervention in the form of bailouts

An analysis of the inter-relationship between savings product usage and satisfaction using a SERVQUAL framework

The article maintains that improved participation in the financial services industries seems to be dependent on satisfaction levels regarding financial services product usage. Empirical evidence shows that higher usage and higher satisfaction regarding basic savings products such as savings accounts, money market investments and fixed deposits, as well as wealth management products such as home loan accounts, vehicle finance, endowment policies, retirement annuity policies, collective investment schemes and other specific needs savings products go hand in hand. Financial advisors, financial regulators as well as financial product providers should understand their role and responsibilities towards savers or potential savers in South Africa to ensure satisfaction levels, which would result in an increase in the use of financial products and could potentially lead to improved savings rates for South Africa.Key words: financial services, satisfaction, SERVQUAL, marginal utility, saving

Consumer financial vulnerability: identifying transmission linkages that could give rise to higher levels of consumer financial vulnerability

Several macroeconomic indicators point to high consumer financial vulnerability in South Africa. These include, inter alia, a relatively high household debt-to-disposable income ratio, household consumption expenditure outstripping household disposable income and a declining real household net wealth-to-disposable income ratio.In a 2009 study, the first level of possible predictors of consumer financial vulnerability was identified. However, no study has been conducted in South Africa to establish the transmission path of consumer financial vulnerability. This paper attempts to identify such a transmission path by determining the order in which the four aspects of the consumer financial vulnerability index, namely consumer income, expenditure, savings and debt servicing vulnerability, impact on one another, making consumers more vulnerable. This was done by means of an econometric modelling technique called Vector Autoregression (VAR) using consumer financial vulnerability data series covering the period Q2 2009 to Q2 2012.The VAR results show that expenditure vulnerability received the highest coefficient of determination score. This indicates that expenditure problems are the Achilles’ heel of South African households, which activates the postulated consumer financial vulnerability index (CFVI) transmission path. To determine the extent to which other macroeconomic variables impact on the postulated CFVI transmission path, a consumer price index (CPI) time series was entered exogenously into the existing VAR equation. It appears from the results obtained that the exogenous inclusion of CPI in the model made a dramatic difference with respect to income and expenditure vulnerability. By including the prime lending rate variable exogenously in the CFVI transmission path, the strong impact of the prime rate on expenditure vulnerability became evident. Finally, by adding the expanded unemployment variable exogenously to the CFVI transmission path in addition to the CPI and prime rate variables, debt servicing vulnerability was strongly impacted. From the CFVI transmission path findings, it became evident that consumers are not able to afford their required necessities, which leads to their becoming expenditure vulnerable. If consumers cannot generate more income to compensate, they become income vulnerable. They draw on their savings to finance the excess expenditure and become savings vulnerable, and if they cannot afford the necessary credit they require to finance their expenditure and have no savings left, they become debt servicing vulnerable.Key words: consumer financial vulnerability, transmission path, personal finance, vector autoregression, vulnerability measuremen