Differences in bank profit persistence in Sub-Saharan Africa

2018 ◽  
Vol 9 (4) ◽  
pp. 512-522 ◽  
Author(s):  
Emmanuel Sarpong-Kumankoma ◽  
Joshua Abor ◽  
Anthony Q.Q. Aboagye ◽  
Mohammed Amidu

Purpose The purpose of this paper is to examine differences in determinants of bank profit persistence among Sub-Saharan African (SSA) countries. Design/methodology/approach Using system generalized method of moments and data from four SSA countries during the period 2006–2012, this study considers differences in determinants of bank profit persistence across countries. Findings Efficiency in cost management is a major determinant of profit persistence in all the countries. However, concentration is found to be insignificant in all the estimations, suggesting that efficiency may be a more important determinant of profit persistence than concentration. Economic freedom associates negatively with profit persistence in Ghana, but its effect is insignificant in Tanzania, Kenya and South Africa. Lending specialization translates into less profit persistence in South Africa, but greater persistence in Tanzania. Higher levels of financial development result in lower profit persistence in Kenya and Ghana, but does not matter in Tanzania and South Africa. Practical implications The level of profit persistence gives an indication of the effectiveness of competition policies, and the differences observed in their determinants in this study suggest the need for tailor-made policy responses in the different countries. Originality/value This study improves the understanding of why some banking market competition policies have not achieved the desired outcomes in some countries. It is evident that blanket rules or wholesale importation of policies from other countries may not work in different contexts.

2019 ◽  
Vol 46 (1) ◽  
pp. 35-54 ◽  
Author(s):  
Simplice Asongu ◽  
Nicholas Biekpe ◽  
Vanessa Tchamyou

Purpose The purpose of this paper is to examine how linkages between information and communication technology (ICT) and remittances affect the doing of business. Design/methodology/approach The focus is on a panel of 49 Sub-Saharan African (SSA) countries for the period 2000–2012. The empirical evidence is based on the generalized method of moments. Findings While the authors establish some appealing results in terms of net negative effects on constraints to the doing of business (i.e. time to start a business and time to pay taxes), some positive net effects are also apparent (i.e. number of start-up procedures, time to build a warehouse and time to register a property). The authors also establish ICT penetration thresholds at which the unconditional effect of remittances can be changed from positive to negative, notably: for the number of start-up procedures, an internet level of 9.00 penetration per 100 people is required, while for the time to build a warehouse, a mobile phone penetration level of 32.33 penetration per 100 people is essential. Practical and theoretical implications are discussed. Originality/value To the best of the authors’ knowledge, this is the first study to assess linkages between ICT, remittances and doing business in SSA.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Olumide Olaoye ◽  
Cleopatra Oluseye Ibukun ◽  
Mustafa Razzak ◽  
Naftaly Mose

PurposeThe paper analyses the prevalence of extreme and multidimensional poverty in line with the sustainable development agenda. In addition, the paper examines the drivers of extreme poverty while accounting for the potential spillover effect of poverty in the region.Design/methodology/approachThe study adopts the pooled OLS with Discroll-Kraay robust standard errors to control for cross-sectional dependence. In addition, given the strong potential for endogeneity of poverty index, the authors also employ the generalized method of moments (GMM), which accounts for simultaneity and endogeneity problems, and the spatial error and lag models to control for all forms of spatial and temporal dependence since the factors that affect poverty disperse across borders.FindingsThe study finds that in addition to the traditional drivers of poverty (unemployment, low per capita GDP growth and public debt), poverty in Sub-Saharan Africa is a symptom of a deeper structural problem (lack of access to water and sanitation, high level of corruption and low level of financial development, and frequent economic busts). Likewise, the results from the spatial econometric specification show, consistently across all the specifications, that there is a substantial spillover effect of poverty across the region.Originality/valueThe main novelty of the paper is that the authors investigate the “economic shrinkage hypothesis,” and examined the potential negative spillover effect of poverty in the region.


2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdullahi Abdulhakeem Kilishi ◽  
Hammed Adesola Adebowale ◽  
Sodiq Abiodun Oladipupo

Purpose This paper aims to investigate the nexus between economic institutions (EI) and unemployment in sub-Saharan African (SSA) countries. Specifically, the paper examines the impact of aggregate EI and ten different components of institutions on total, male and female unemployment in SSA. Design/methodology/approach The paper used unbalanced panel data of 37 SSA countries covering the period between 1995 and 2018. A dynamic heterogenous panel data model is specified for the study. Two alternative estimation techniques of dynamic fixed effect and pool mean group methods were used to estimate the models. The choice of appropriate method is based on Hausman specification test. Findings The findings reveal that aggregate EI and institutions related to the monetary system, trade flows, government spending and fiscal process significantly lead to less unemployment in the long-run. However, there is no evidence of a significant relationship between EI and unemployment in the short-run. These findings are consistent for total, male and female unemployment, respectively. Practical implications To reduce unemployment significantly in the long run, policymakers in SSA need to build more market-friendly institutions that will incentivize private investment, allow free movement of labour and goods, as well as guarantee a stable macroeconomic environment and efficient fiscal system. Originality/value Most of the existing studies focused on the influence of labour market institutions on unemployment ignoring the effects of other forms of institutions. While available studies on the link between institutions and unemployment used either OECD or other developed countries sample, with scanty evidence from Africa. However, the effects of EI could vary across regions. Thus, generalizing the findings from developed countries for SSA countries and other developing countries may be misleading. Hence, this paper contributes to the existing literature by examining the nexus between different types of EI and unemployment using the SSA sample.


2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Emmanuel Sarpong-Kumankoma ◽  
Joshua Yindenaba Abor ◽  
Anthony Q. Q. Aboagye ◽  
Mohammed Amidu

PurposeThis study aims to analyze the potential implications of economic freedom and competition for bank stability.Design/methodology/approachUsing system generalized method of moments and data from 139 banks across 11 Sub-Saharan African (SSA) countries during the period 2006–2012, this study considers whether the degree of economic freedom affects the relationship between competition and bank stability.FindingsThe results show evidence of the competition-fragility hypothesis in SSA banking, but suggests that beyond a setting threshold, increases in market power may also be damaging to bank stability. Financial freedom has a negative effect on bank stability, suggesting that banks operating in environments with greater financial freedom generally tend to be less stable or more risky. The authors also find evidence of a conditional effect of economic freedom on the competition–stability relationship, implying that bank failure is more likely to occur in countries with greater economic freedom, but with low competition in the banking sector.Practical implicationsThe results suggests to policy makers that a moderate level of competition and economic freedom may be the appropriate policy to ensure the stability of banks.Originality/valueThe study provides insight on the competition–bank stability relationship, by providing new empirical evidence on the effect of economic freedom, which has not been previously considered.


2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Simplice A. Asongu ◽  
Nicholas M. Odhiambo

Purpose The purpose of this paper is to assess the importance of credit access in modulating governance for gender-inclusive education in 42 countries in Sub-Saharan Africa with data spanning the period 2004–2014. Design/methodology/approach The generalized method of moments is used as empirical strategy. Findings The following findings are established: First, credit access modulates government effectiveness and the rule of law to induce positive net effects on inclusive “primary and secondary education.” Second, credit access also moderates political stability and the rule of law for overall net positive effects on inclusive secondary education. Third, credit access complements government effectiveness to engender an overall positive impact on inclusive tertiary education. Originality/value Policy implications are discussed with emphasis on sustainable development goals.


Subject Prospects for Africa's economies to end-2016. Significance The IMF's most recent forecast of 3% GDP growth for sub-Saharan Africa (SSA) in 2016 represents a significant cut from the 4.25% it expected in October 2015. This is a consequence of sharp slowdowns in the region's two largest economies, Nigeria and South Africa, droughts in previously buoyant economies (notably in eastern and southern Africa), a variety of idiosyncratic shocks and a prolonged commodity price downturn.


Subject Infrastructure outlook for Sub-Saharan Africa. Significance Africa's infrastructure needs are under increasing scrutiny after several recent high-profile summits, as well as visits by international leaders to the continent. Sub-Saharan African (SSA) countries need to invest collectively an estimated 130-170 billion dollars per year to maintain and enhance transportation networks, achieve near 100% electrification and 100% access to water and sanitation. However, SSA faces an annual deficit of more than 68 billion dollars unless financing commitments increase sharply. Impacts A growing number of international insurance firms are likely to invest in regional and continent-wide infrastructure funds. Sovereign wealth funds could lead the private financing drive as they face fewer restrictions than pension funds and invest long-term. Amid growing African debt levels, development banks and multilateral bodies will increasingly support private infrastructure deals.


2017 ◽  
Vol 8 (1) ◽  
pp. 8-18 ◽  
Author(s):  
Sydney Chikalipah

Purpose The purpose of this paper is to investigate the determinants of financial inclusion (FI) in Sub-Saharan Africa (SSA). Design/methodology/approach The paper uses the World Bank country-level data from 20 SSA countries for the year 2014. Findings The empirical findings in this study indicate that illiteracy is the major hindrance to FI in SSA. The findings provide useful information to government agencies and international development organisations. Also, the findings can help accelerate and strengthen FI strategies among SSA countries. Research limitations/implications Some countries were excluded from the final analysis due to lack of data. Practical implications In the last two decades, there has been renewed interest in fighting financial exclusion in Africa. Therefore, this study provide evidence which clearly shows that enhancing literacy levels in a country can immensely contribute towards building the financially inclusive societies in the SSA region. Originality/value To the best of the author’s knowledge, this is the first study to empirically test the determinants of FI in SSA using the World Bank FI data set. Furthermore, this is the first attempt to estimate the determinants of FI with a combined data of SSA countries.


2020 ◽  
Author(s):  
Lori Ann Post ◽  
Salem T Argaw ◽  
Cameron Jones ◽  
Charles B Moss ◽  
Danielle Resnick ◽  
...  

BACKGROUND Since the novel coronavirus emerged in late 2019, the scientific and public health community around the world have sought to better understand, surveil, treat, and prevent the disease, COVID-19. In sub-Saharan Africa (SSA), many countries responded aggressively and decisively with lockdown measures and border closures. Such actions may have helped prevent large outbreaks throughout much of the region, though there is substantial variation in caseloads and mortality between nations. Additionally, the health system infrastructure remains a concern throughout much of SSA, and the lockdown measures threaten to increase poverty and food insecurity for the subcontinent’s poorest residents. The lack of sufficient testing, asymptomatic infections, and poor reporting practices in many countries limit our understanding of the virus’s impact, creating a need for better and more accurate surveillance metrics that account for underreporting and data contamination. OBJECTIVE The goal of this study is to improve infectious disease surveillance by complementing standardized metrics with new and decomposable surveillance metrics of COVID-19 that overcome data limitations and contamination inherent in public health surveillance systems. In addition to prevalence of observed daily and cumulative testing, testing positivity rates, morbidity, and mortality, we derived COVID-19 transmission in terms of speed, acceleration or deceleration, change in acceleration or deceleration (jerk), and 7-day transmission rate persistence, which explains where and how rapidly COVID-19 is transmitting and quantifies shifts in the rate of acceleration or deceleration to inform policies to mitigate and prevent COVID-19 and food insecurity in SSA. METHODS We extracted 60 days of COVID-19 data from public health registries and employed an empirical difference equation to measure daily case numbers in 47 sub-Saharan countries as a function of the prior number of cases, the level of testing, and weekly shift variables based on a dynamic panel model that was estimated using the generalized method of moments approach by implementing the Arellano-Bond estimator in R. RESULTS Kenya, Ghana, Nigeria, Ethiopia, and South Africa have the most observed cases of COVID-19, and the Seychelles, Eritrea, Mauritius, Comoros, and Burundi have the fewest. In contrast, the <i>speed</i>, <i>acceleration</i>, <i>jerk</i>, <i>and 7-day persistence</i> indicate rates of COVID-19 transmissions differ from observed cases. In September 2020, Cape Verde, Namibia, Eswatini, and South Africa had the highest speed of COVID-19 transmissions at 13.1, 7.1, 3.6, and 3 infections per 100,0000, respectively; Zimbabwe had an acceleration rate of transmission, while Zambia had the largest rate of deceleration this week compared to last week, referred to as a <i>jerk</i>. Finally, the 7-day persistence rate indicates the number of cases on September 15, 2020, which are a function of new infections from September 8, 2020, decreased in South Africa from 216.7 to 173.2 and Ethiopia from 136.7 to 106.3 per 100,000. The statistical approach was validated based on the regression results; they determined recent changes in the pattern of infection, and during the weeks of September 1-8 and September 9-15, there were substantial country differences in the evolution of the SSA pandemic. This change represents a decrease in the transmission model R value for that week and is consistent with a de-escalation in the pandemic for the sub-Saharan African continent in general. CONCLUSIONS Standard surveillance metrics such as daily observed new COVID-19 cases or deaths are necessary but insufficient to mitigate and prevent COVID-19 transmission. Public health leaders also need to know where COVID-19 transmission rates are accelerating or decelerating, whether those rates increase or decrease over short time frames because the pandemic can quickly escalate, and how many cases today are a function of new infections 7 days ago. Even though SSA is home to some of the poorest countries in the world, development and population size are not necessarily predictive of COVID-19 transmission, meaning higher income countries like the United States can learn from African countries on how best to implement mitigation and prevention efforts. INTERNATIONAL REGISTERED REPORT RR2-10.2196/21955


Significance The twin processes of urbanisation and middle class growth have driven a rapid increase in vehicles on the road, leading to gridlock in many cities across sub-Saharan Africa (SSA). Excessive traffic on the continent undermines economic productivity by abbreviating work hours, increasing transit costs and contributing to a range of environmental and health problems. Impacts Projected exponential population growth in SSA will add pressure to already-strained urban infrastructure. Lack of law enforcement, poor roads and reckless driving will likely keep SSA countries among the most dangerous for driving. Radical measures to relocate populations away from urban centres would face stiff resistance.


Sign in / Sign up

Export Citation Format

Share Document