Corruption, Credit Risk, and Bank Profitability

2022 ◽  
pp. 83-98
Author(s):  
João Jungo ◽  
Wilson Luzendo ◽  
Yuri Quixina ◽  
Mara Madaleno
Keyword(s):  
Economic Growth ◽  
Credit Risk ◽  
Banking System ◽  
Generalized Least Squares ◽  
African Countries ◽  
Public Funds ◽  
Bank Profitability ◽  
Role Of Government ◽  
Management Of Resources

The economies of African countries are generally characterized by inefficient management of resources, strong heterogeneity in the rate of economic growth, as well as high levels of corruption and embezzlement of public funds, clearly highlighting the need to consider the role of government in the performance of the economic environment. Corruption is characterized by three key behaviors—bribery, embezzlement, and nepotism—characteristics that can influence the performance of any financial system. The objective is to examine the effect of corruption on credit risk in Angola. The result of the feasible generalized least squares (FGLS) estimation suggests that corruption increases non-performing loans in the Angolan economy; additionally, the authors find that the larger the bank's assets (bank size), the more averse to credit risk they become, and the smaller the state's stake in the banking system, the lower the non-performing loans.

Toward a dynamic capability theory of economic growth

2019 ◽  
Vol 29 (4) ◽  
pp. 1047-1065 ◽  
Author(s):  
David Sainsbury
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Value Added ◽  
The United States ◽  
Dynamic Capability ◽  
Alexander Hamilton ◽  
Role Of Government ◽  
Windows Of Opportunity ◽  
The Uk

Abstract New theories of economic growth that are policy-relevant and connect with the histories of success and failure in economic development are urgently needed. This article compares the neoclassical (or market efficiency) school of thought with the production-capability school of thought which included Alexander Hamilton, Friedrich List, and Joseph Schumpeter. Many affirmative, industrial policy steps by governments to promote economic development have been historically recorded—including in the UK and the United States. Meanwhile the neoclassical school has ignored the role of government in helping to create competitive advantage. It has also chosen to ignore how firms are formed, how technologies are acquired, and how industries emerge. The dynamic capability theory of economic growth developed here assigns the central role in economic growth to firms but also an important role to governments. The rate at which a country’s economy grows depends critically on whether its firms can build the capabilities to generate and take advantage of “windows of opportunity” that exist for innovation and new markets, and whether over time they are able to enhance their capabilities to move into higher value-added activities.1

Inflationary Thresholds, Financial Development and Economic Growth: New Evidence from Two West African Countries

2017 ◽  
Vol 17 (2) ◽  
pp. 20160042 ◽  
Author(s):  
Bernard Njindan Iyke ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Inflation Rate ◽  
Data Availability ◽  
Development Economic ◽  
African Countries ◽  
Inflation Rates ◽  
New Evidence ◽  
Threshold Range

This paper examines the role of inflationary threshold effects in the finance-growth relationship for Ghana and Nigeria. Ghana and Nigeria are relatively homogenous in terms of financial development, economic growth, and inflationary history and therefore provide an acceptable choice for this empirical analysis. Due to lack of data availability, the sample spans the period 1964–2011 for Ghana and 1961–2011 for Nigeria. Using appropriately specified threshold regressions, we found inflationary thresholds in both countries during the study periods. Specifically, the inflationary threshold range for Ghana is 10.73 %–29.83 %. For Nigeria, the inflationary threshold range is 10.07 %–19.25 %. By estimating the threshold regressions, we found financial development to have positive and significant effect on economic growth during low and moderate inflationary regimes; and insignificant effect on growth during high inflationary regimes, for both countries. In particular, financial development impact greatly on growth in Ghana when the rate of inflation is below a threshold of 10.73 % but dissipates when inflation rate reaches and exceeds 29.83 %. Similarly, financial development impact greatly on growth in Nigeria when the rate of inflation is below a threshold of 10.07 % but dissipates when inflation rate reaches and exceeds 19.25 %. The results imply that policymakers in these countries should take inflation into account when devising policies to promote financial development with the aim of generating economic growth. For without low or moderate inflation rates, such policies will not achieve their intended purposes.

scholarly journals Deposit Money Banks and Economic Growth in Nigeria

2014 ◽  
Vol 5 (1) ◽  
pp. 41-50 ◽  
Author(s):  
Samson Ogege ◽  
Tarila Boloupremo
Keyword(s):  
Economic Growth ◽  
Time Series Data ◽  
Banking System ◽  
Least Square ◽  
Series Data ◽  
Credit Allocation ◽  
Least Square Estimator ◽  
Ordinary Least Square ◽  
Residual Series

This paper examines the effect of deposit money banks intermediation role on economic growth and development in Nigeria. The main objective of the research was to ascertain the extent to which sectorial credit allocation by deposit money banks have influenced growth in the economy. Time series data covering the period 1973-2011 for deposits money banks credits in Nigeria and per capita gross domestic product were analyzed within the framework of Engle-Granger Representation Theorem; the approach estimated a co-integrating regression using the ordinary least square estimator, and then investigated the presence of a co-integration relation by examining the stationarity of the estimated residual series. The findings indicate that credit allocation to the production sector is significantly promoting economic activity. The implication that can be drawn from this study is that to ensure that the banking system performs its role of credit allocation effectively it must channel funds into productive investment and more productive uses; deposit money banks should act as efficient financial intermediaries devoted to allocating resources to the most productive uses.

scholarly journals Hunger in Madagascar: A Case Study

2020 ◽  
Vol 4 (2) ◽  
pp. p21
Author(s):  
Lincoln J. Fry
Keyword(s):  
Agricultural Sector ◽  
Asset Ownership ◽  
African Countries ◽  
Individual Country ◽  
Role Of Government ◽  
Country Level ◽  
The Government ◽  
National Probability Sample

This paper is a continuation of a larger study which assesses hunger in African countries. The purpose of these papers in this is to look at the scope of hunger in countries and then to identify the factors that predict hunger in each individual country. This is the 5th paper in the series and is concerned with hunger in Madagascar, one of Africa’s and the world’s hungriest countries. The paper is important for several reasons. One is the fact that it, like all the country level papers, is based on a national probability sample, something the literature stresses is lacking and needed to improve hunger research. A second is that all the papers in the series, including this one, found that the literature’s suggestion that gender and the rural-urban dimension are significant predictors of hunger. These studies have provided a consistent list of significant hunger predictors. Employment in the country’s agricultural sector, wealth as measured by asset ownership, education and age were consistent significant predictors, .The surprising findings were related to respondent perception of the role of government in addressing hunger, questions like the way the government was handling whether people had enough to eat or addressing the living standards of the poor. The major policy implication of this and earlier papers is that governments need to reach out to citizens, presenting them with their food related plans and assuring them that the government is doing everything within its power to address hunger in their countries.

scholarly journals Financial Development And Growth In Middle Eastern Countries

2010 ◽  
Vol 9 (11) ◽  
Author(s):  
Mounther Barakat ◽  
Edward Waller
Keyword(s):  
Economic Growth ◽  
Financial Markets ◽  
Financial Development ◽  
Financial Intermediation ◽  
Middle Eastern ◽  
Banking System ◽  
Specific Factors ◽  
The Relationship

This paper studies the relationship between financial intermediation and economic growth in a sample of Middle Eastern countries.  The results are consistent with the hypothesis that a well-functioning banking system promotes economic growth.  Moreover, the results suggest that market-specific factors may hinder financial markets’ ability to play hypothesized roles, while enhancing the role of intermediaries.  The paper’s general conclusion is that financial development does affect economic growth.  However, market specific factors affect the magnitude and significance of this effect.  The implication is that studies should control for market-specific factors to assess the relationship between financial development and growth.

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