The questionnaire has been designed for maximum efficiency and minimum input time. Only multiple-answer type ticks are required. No figures are requested. For example, participants only have to tick if a particular activity (such as total income or number of people employed) is “up”, “the same” or “down” compared to the same period a year ago and with respect to their South African operations only.
Respondents are carefully selected and approached on the basis of their position in the financial world. The head of retail banking or the head of group life insurance is quizzed, and not the chairperson of the board of directors of the group or holding company. Divisional heads tend to be best informed about their business units. The confidentiality of the responses adds to the honesty and candour of participants. Furthermore, respondent quality is monitored.
The same group of participants is surveyed from one quarter to the next. Changes in the results from one quarter to the next can therefore be attributed to an actual change in the performance yardstick in question and not because of the participation – or not – of particular banks, asset managers or life insurers.
South Africa has relatively few banks, asset managers and life insurers. For example, four banks dominate the retail and six the merchant and investment banking sector. Likewise, two companies dominate the life insurance industry. The number of potential participants in a Financial Sector Survey is therefore relatively low in South Africa.
The participating retail and investment banks accounted for 95% of total assets of registered banks in December 2007. The value of the total funds under management of the participating asset managers accounted for 63% of the total during the second quarter of 2007.
The degree of presentation of the panel of participants has an important impact on the reliability of a quantitative survey, i.e. when respondents have to indicate actual amounts for each activity and the rand value of the level and change are calculated. In contrast, the Financial Sector Survey is a qualitative survey, i.e. the majority view of respondents on a particular activity is taken as an indication of the direction and strength of the trend in that activity. The degree of presentation of the panel of participants is less of a concern in the case of qualitative surveys. Furthermore, the participation – or not – of a particular respondent has less of an impact on the overall results in the case of qualitative surveys compared to quantitative ones, as the view of the majority is established and not the actual size.
For reasons of focus, the following financial institutions are not covered, namely short-term insurers, public financial institutions (e.g. the Reserve Bank, Land Bank, Post Bank and official pension and provident funds), medical insurance savings schemes, the informal micro-lending and savings industry, retailers providing credit and individual insurance brokers/agents. The survey also only focuses on the supply of financial services and not on the demand for such services, which stem from government, businesses, households and the rest of the world.
The survey results reveal trends and not actual figures. The net balance statistic is used to interpret the survey results. The net balance statistic is the percentage of respondents replying “up” less the percentage replying “down”. The percentage of respondents replying “the same” is ignored. Over the years, the net balance statistic has proved to be the most reliable indicator of the direction and size of change in the trend of the respective activities surveyed.
The net balance statistic is a qualitative yardstick of the direction and size of the year-on-year growth rate of a particular activity. A positive net balance implies positive year-on-year growth and vice versa. The higher the value of the net balance (positive/negative), the larger the rate of increase/decrease of the activity in question.
To aggregate the sector performance, individual responses are weighted according to their institution’s relative size. It makes sense that the response of a small participant has to count less compared to that of a large participant.
Results are published according to type of activity (e.g. retail banking, investment banking, life insurance and asset management) and not per institution.