×

We've got news for you.

Register on BusinessLIVE at no cost to receive newsletters, read exclusive articles & more.
Register now

The claim that South African companies have large deposits of "idle cash" in their bank accounts is firmly entrenched in our economic discourse. Yet the reality is that bank deposits are never "idle". As Nedbank CEO Mike Brown recently explained, no profit-maximising bank would pay depositors interest for money to accumulate in their bank vaults. All deposits are on-lent to borrowers through the banking system. Nonetheless, the government and labour continue to point to increased deposits as evidence of an "investment strike" by business, which is seen as hoarding large amounts of cash. As "proof" of this, critics point to the rising bank deposits reported by the Reserve Bank. Bank deposits of companies and close corporations have risen from R60bn in 1994 to R1.7-trillion today. As a share of GDP, they increased from 12% to 40%. This increase in deposits has mistakenly been attributed to businesses retaining profits. This cannot be so. In looking at only half of the balance sheet, i...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as articles from our international business news partners; ProfileData financial data; and digital access to the Sunday Times and Sunday Times Daily.

Already subscribed? Simply sign in below.



Questions or problems? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now

Would you like to comment on this article?
Register (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.

Commenting is subject to our house rules.