Improving data quality in the banking supervisory data of Southern Africa central banks

13 Jun 2012

The importance of effective supervision of banking institutions in developing countries cannot be over-emphasised. Central banks are responsible for the supervision of the banking institutions of a country. In order to effectively perform the supervisory role of banking institutions, central banks need to collect and analyse data about the operations of the banking institutions they supervise. Data analysis is conducted in order to establish the health of these institutions. Central banks in the SADC region experience many problems with the quality of the data that they receive from the banking institutions they supervise. Needless to say, decisions made on the basis of poor quality data increase the risk of allowing unsound institutions to continue in operation. This creates the real risk of loss of money by the individuals and organisations that form the clientele of these institutions, and will adversely affect the economy of the country. Despite the commendable efforts made by the regional central banks to implement a banking supervision application to expedite the supervisory activities through instituting a one-stop-shop for all the banking supervisory information, and the introduction of an electronic platform for collecting and analysing periodic banking supervision returns, there are still many imperfections in the information. A survey was conducted to investigate data quality problems at three SADC central banks. Recommendations are provided in this paper on measures that can be taken to improve the quality of the banking supervisory data for the SADC central banks.