Pieter G. Vosloo, Ph.D, Gyro CCS Pty Ltd, Holtzhausen 12, Bailie Park, Potchefstroom, 2521, South Africa and J. Wihan van Huyssteen, Master, Economics, North-West University, Hoffman Street, Potchefstroom, 2521, South Africa.
In the case of cancellation, termination or death of a member of a credit co-operative, that member’s funds at the bank needs to be paid out to the beneficiary. In some cases where the member has a sizable portion of the co-operative’s funds, the withdrawal of funds can be crippling. In order to remain at an acceptable level of liquidity, the bank may place papers in the market, borrow from other financial institutions or make use of its reserves. The problem this paper attempts to address, making use of credit ratings, is how co-operative banks in South Africa (hereinafter referred to as CBSAs), are to be rated in order to address their funding requirements (at favourable interest rates).