An empirical study of regulatory compliance in South African banks

Abstract

Event studies are vital analytical tools used to gauge if unusual investment returns result from events within defined time frames. This article explores events marked by the disclosure of administrative penalties imposed on South African publicly traded financial institutions between 2011 to 2021 due to non-compliance with regulations. Results reveal statistically significant abnormal returns occur in at least 70% of cases, with negative events like fines correlating with negative returns. The findings emphasise the impact of regulatory fines on the performance of listed financial institutions. Banks are advised to monitor and manage conduct risk systematically and carefully.