IntroductionOrigin and history of banking in South AfricaThe concept of banking has existed in South Africa since the 1790s with the establishment of the Lombaard Bank in Cape Town. European investment increased following the discovery of significant mineral resources in the late 19th century. But it was not until the mid-20th century that South Africa experienced a massive boom in its financial sector, with total financial assets exceeding GDP. This growth was hampered by disinvestment in protest against the apartheid policy introduced in 1948. But as the economy recovered from the negative impacts of the apartheid policy, the banking sector also recovered, assets accounting for 139 percent of GDP in 2008. (Mlambo, 2011)Overview of the banking sectorThe South African banking sector has grown significantly since the elimination of apartheid. This is due to consolidation and innovation. Investment banking and corporate banking remain the most competitive sector in the industry. The South African Reserve Bank is the body responsible for regulating banking activities in the country. It acts as a banker to the government and is responsible for providing liquidity, implementing monetary policy, settling interbank claims and banking supervision. Established by an Act of Parliament, it is not an independent body and is responsible for its functions to the South African government. Currently, the South African banking sector comprises 17 registered banks, 2 mutual banks, 12 local branches of foreign banks and 41 foreign banks with licensed local representative offices. (www.banking.org.za). A significant percentage of banking assets in South Africa are held by...... middle of paper...... indication of increased competition within the sector. This suggests that there is a positive relationship between competition and efficiency. So, as competition increases, efficiency increases. Collusion is one of the effects of an oligopolistic market structure. Indeed, the fact that few companies have a significant market share encourages them to enter into agreements to exploit the market structure and increase their profits. This also decreases efficiency. There is no evidence of collusion in the South African banking sector, but this does not rule out the possibility of tacit collusion, where covert cooperation between banks leads to increased profitability for all involved through the Nash equilibrium. Explain?ConclusionIn conclusion,Structural performance frameworkThe challenges of the big four banks in reaching the poor?ElasticitiesThe end.