scholarly journals Banking Sector Competition and Financial Development in Sub-Saharan Africa

2020 ◽  
Vol 5 (3) ◽  
pp. 58-85
Author(s):  
Charles K. Ricky-Okine ◽  
Twum Amankwaa ◽  
Emmanuel Anane
Keyword(s):  
Financial Development ◽  
Fixed Effects ◽  
Banking Sector ◽  
Financial Sector ◽  
Sub Saharan Africa ◽  
Annual Data ◽  
Development Bank ◽  
Full Sample ◽  
Macroeconomic Variables ◽  
Sub Saharan

The study sort to establishing a relationship between banking sector competition and financial development in subSaharan n Africa. The study further disaggregated the data used into Francophone and Anglophone countries, and these were examined separated and compared. Using an annual data on banks across 37 countries in Sub-Saharan Africa spanning the period 2001-2016 and employing the Fixed Effects estimation technique, the study revealed that there is a positive and significant relationship between financial development (FDCredit) and competition (CR3) for the full sample and the anglophone samples. The study further revealed that banking sector stability is essential for the financial development of both Anglophone and francophone countries within the sub-region. Macroeconomic variables did not have any impact on financial development generally except in francophone countries where exchange rates were found to have an impact on financial development. Bank-level variables such as ZSCORE, non-performing loans, profitability, liquidity and capitalization, on the hand had little impact in Anglophone countries on financial development compared to francophone countries. The study found that larger banks contribute positively to the development of the financial sector and banks tend to be bigger in Anglophone countries, and their banking sector is also more competitive than the francophone countries for the period used. Less emphasis should be placed on bank-level variables as these do not have significant impacts on the financial sector for Anglophone countries. Francophone countries should, however, control bank-level variables to ensure that they achieve greater financial development. Citation: Ricky-Okine, C. K., Amankwaa, T.and Anane, E.Banking Sector Competition and Financial Development in Sub-Saharan Africa,2020; 5(3): 58-85. Received: July 18, 2020Accepted: September 30, 2020

Savings-investment-financial development trilogy: evidence from SSA

2017 ◽  
Vol 9 (1) ◽  
pp. 20-33
Author(s):  
Ibrahim D. Raheem ◽  
Mutiu Abimbola Oyinlola
Keyword(s):  
Financial Development ◽  
Quantitative Measure ◽  
Financial Sector ◽  
Sub Saharan Africa ◽  
Content Type ◽  
Qualitative Nature ◽  
Sub Saharan ◽  
Generalised Method Of Moments ◽  
Qualitative Measure

Purpose The study seeks to examine the role of financial development (FD) in the Feldstein–Horioka (FH) puzzle. The novelty of this study is based on the fact that the measures of FD are expanded to account for the qualitative nature of the financial sector (“better finance”). Design/methodology/approach The study used annual dataset for 37 countries in sub-Saharan Africa (SSA) for the period 1999 through 2010 and relied on the system generalised method of moments (GMM) technique, which takes accounts of endogeneity-related issues. Findings The estimated FH coefficients ranged between 0.419 and 0.720. The qualitative measures of FD have higher FH coefficient relative to the traditional or quantitative measure of FD (“more finance”). Hence, improvement in both the quantity and quality of the financial sector might be helpful in the mobilization, distribution and utilization of savings for investment purposes within these economies. The high FH coefficients obtained suggest that the FH puzzle does not hold in the SSA region. Practical implications Policymakers should formulate and design policies that would seek to ensure the development of the financial sector both in terms of quantity and quality. While taking this into consideration, special attention should be devoted to the qualitative measure of finance. Originality/value The study extends the work of Adeniyi and Egwaikhide (2013) by providing different and, possibly better proxies for FD to capture the efficiency and the qualitative nature of the financial system. This crux of the study serves as the value addition to the literature, as no other study the authors are aware of, has considered the importance of “better finance” indicators in the saving – investment nexus investigation.

scholarly journals Investigating the Banking Sector Development Transmission Mechanism of Financial Development to Growth: Evidence from Sub-Saharan Africa (SSA)

2019 ◽  
Vol 11 (2(J)) ◽  
pp. 120-131
Author(s):  
Tochukwu Timothy Okoli ◽  
Ajibola Rhoda Oluwafisayomi
Keyword(s):  
Steady State ◽  
Financial Development ◽  
Banking Sector ◽  
Dynamic Models ◽  
Sub Saharan Africa ◽  
Transmission Channel ◽  
Steady State Growth ◽  
Sub Saharan ◽  
State Growth ◽  
Ssa Countries

The search for financial development’s transmission channel to growth has always been updated in the literature. While there has not been a consensus on this matter, empirical findings on finance-growth nexus have been ambiguous. Relying on this, we investigate its bank development transmission channel to growth in a panel of twenty-eight Sub-Saharan Africa (SSA) countries from 2000-2016. Having adopted the augmented Solow (1956) and Mankiw et al. (1992) growth model, the fixed effect and dynamic system GMM estimation techniques reveals a negative non-significant and positive significant direct impact of finance on growth in the static and dynamic models respectively, thereby suggesting institutional (dynamic) factors that can spur finance. Secondly, the non-linear effects of bank development had a direct positive significant impact on growth and its marginal-effects before and after the financial crisis of 2007/08 were relatively stable. This implies that banks in SSA were relatively stable in financial intermediation; therefore SSA countries need to reinforce and improve its banking policy through FinTechs adoption. Finally, the interaction between bank development and financial development significantly increase steady-state growth. This implies that SSA economies can promote steady-state growth from financial development only when a threshold of bank development is reached.

The nexus between foreign bank presence and credit to the private sector: evidence from Sub-Saharan Africa

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vera Fiador ◽  
Lordina Amoah ◽  
Emmanuel Abbey
Keyword(s):  
Private Sector ◽  
Fixed Effects ◽  
Financial Integration ◽  
Financial Sector ◽  
Foreign Bank ◽  
Sub Saharan Africa ◽  
Content Type ◽  
Access To Credit ◽  
Sub Saharan ◽  
The Impact

PurposeThe purpose of the study is to explore the implications of global financial integration on host economies in Sub-Saharan Africa (SSA). The study tests the competing views on the impact of foreign bank penetration on private sector access to credit in developing host economies.Design/methodology/approachUsing data on a panel 25 SSA economies over a period of 22 years from 1995 to 2016, the study employs fixed effects and Prais-Winsten estimations as well as generalized methods of moments (GMM) to test the foreign bank impact.FindingsThe findings show support for the hypothesis that global financial integration has positive implications for participating economies. In other words, financial sector liberalization and deregulation leading to the influx of foreign banks has positive implications for access to credit by the private sector in SSA economies. The study also finds other standard determinants of access to credit like lending rate and broad money supply conforming to the existing literature in terms of impact.Originality/valueOverall, the findings hold relevant implications for banking sector policies and the financial sector in general regarding the priority that policy makers and advisors attach to reforming financial sector policies.

scholarly journals Financial development and economic growth: literature survey and empirical evidence from sub-Saharan African countries

2011 ◽  
Vol 12 (1) ◽  
pp. 11-27 ◽  
Author(s):  
Songul Kakilli Acaravci ◽  
Ilhan Ozturk ◽  
Ali Acaravci
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Banking Sector ◽  
Sub Saharan Africa ◽  
African Countries ◽  
Real Gdp ◽  
Long Run ◽  
Domestic Credit ◽  
Real Gdp Per Capita ◽  
Sub Saharan

In this paper we review the literature on the finance-growth nexus and investigate the causality between financial development and economic growth in Sub-Saharan Africa for the period 1975-2005. Using panel co-integration and panel GMM estimation for causality, the results of the panel co-integration analysis provide evidence of no long-run relationship between financial development and economic growth. The empirical findings in the paper show a bi-directional causal relationship between the growth of real GDP per capita and the domestic credit provided by the banking sector for the panels of 24 Sub-Saharan African countries. The findings imply that African countries can accelerate their economic growth by improving their financial systems and vice versa.

Financial inclusion and financial sector development in Sub-Saharan Africa: a panel VAR approach

2019 ◽  
Vol 15 (4) ◽  
pp. 444-463
Author(s):  
Ebenezer Bugri Anarfo ◽  
Joshua Yindenaba Abor ◽  
Kofi Achampong Osei ◽  
Agyapomaa Gyeke-Dako
Keyword(s):  
Financial Sector ◽  
Financial Inclusion ◽  
Sub Saharan Africa ◽  
Outcome Variable ◽  
Panel Var ◽  
Full Sample ◽  
Content Type ◽  
Financial Sector Development ◽  
Sub Saharan ◽  
Dynamic Link

Purpose The purpose of this paper is to investigate the dynamic link between financial inclusion and financial sector development (FSD) in Sub-Saharan Africa. Design/methodology/approach This paper employs a panel vector autoregressive framework to examine the dynamic link between financial inclusion and FSD in Sub-Saharan Africa. Findings The findings indicate that there is a reverse causality between FSD and financial inclusion in both the Sub-Saharan Africa countries sample and the full sample. It is evident that financial inclusion is a driver of FSD and vice versa. Practical implications The practical implication of this study is that financial inclusion should not only be pursued as a policy objective but it could also be an outcome variable of FSD and vice versa. This implies that African economies and governments in their effort to enhance financial inclusion, FSD can serve as a policy tool. This means that policies aimed at promoting financial inclusion will not impede FSD because the two are complementary. This suggests that we can achieve financial inclusion without sacrificing FSD and vice versa. Originality/value This paper provides first empirical evidence of the link between financial inclusion and FSD from the Sub-Saharan Africa perspective using data sourced from World Development Indicators spanning from 1990 to 2014 for 48 Sub-Saharan African economies and 217 economies in the world for the full sample.

The African Development Bank, Organized Hypocrisy, and Maternal Mortality

2019 ◽  
Vol 5 (1) ◽  
pp. 31-49 ◽  
Author(s):  
Jamie M. Sommer ◽  
John M. Shandra ◽  
Michael Restivo ◽  
Holly E. Reed
Keyword(s):  
Maternal Mortality ◽  
Fixed Effects ◽  
Health Sector ◽  
Bank Lending ◽  
Sub Saharan Africa ◽  
Fixed Effects Model ◽  
Development Bank ◽  
African Development ◽  
African Development Bank ◽  
Sub Saharan

We draw on the theory of organized hypocrisy and examine how different forms of lending by the African Development Bank affect maternal mortality in Sub-Saharan Africa. We do so by using a two-way fixed effects model for a sample of 33 Sub-Saharan African nations from 1990 to 2010. We find that the bank's structural adjustment lending in the health sector is associated with increased maternal mortality, and its reproductive health investment lending is associated with decreased maternal mortality, consistent with the organized hypocrisy approach. These findings remain stable and consistent even when controlling for World Bank lending and other relevant control variables. We conclude by discussing the implications of these findings for global health and development.

scholarly journals Foreign Direct Investment - Growth Linkage in Sub-Saharan Africa: Is Governance a Mediating Factor?

2019 ◽  
Vol 6 (2) ◽  
pp. 111-129
Author(s):  
Fisayo Fagbemi ◽  
Kehinde Mary Bello
Keyword(s):  
Economic Growth ◽  
Fixed Effects ◽  
Political Stability ◽  
Business Environment ◽  
Mediating Effect ◽  
Sub Saharan Africa ◽  
Policy Framework ◽  
Investment Efficiency ◽  
African Countries ◽  
Sub Saharan

In sub – Saharan Africa, weak institutions and the rising concern for improved business environment offer considerable leverage for enhancing the effectiveness of institutional framework, capital inflows, and public investment efficiency. These have put SSA in the global spotlight in recent times. Hence, the study examines the mediating effect of governance on FDI – growth nexus in 35 SSA countries between 2002 and 2017 using panel data techniques (Pooled OLS, Fixed Effects, and Panel-Corrected Standard Error’ (PCSE) estimation) and the Dynamic One – Step Difference and System GMM. Results indicate that control of corruption, political stability and regulatory quality, including governance composite index, have a positive and significant effect on economic growth, suggesting that institutions have a salutary impact on SSA economies. The findings further show that FDI inflows adversely influence growth owing to insufficient absorptive capacity that could enhance FDI effectiveness in the region. More importantly, the pervasiveness of poor governance in SSA is identified as a critical case that undermines the development of the nexus between FDI and economic growth. Thus, the study suggests that FDI – growth linkage would be enhanced by promoting a strong institutional environment that offers a good mechanism for attaining the actual FDI spillover potential through a policy framework that points the path towards cost-effective measures in SSA. Also, there should be core investment policies across African countries that would induce the private sector in consolidating government efforts and resources aimed at improving international competitiveness by diversifying the region’s economies away from a protracted commodity – based.

scholarly journals Financing innovative development of the African economies: the role of digitalization and financial innovations

2020 ◽  
Vol 28 (3) ◽  
pp. 429-439
Author(s):  
Tijani Forgor Alhassan ◽  
Ahou Julie Kouadio ◽  
Dadson Etse Gomado
Keyword(s):  
Financial Development ◽  
Financial Services ◽  
Positive Relationship ◽  
Financial Innovation ◽  
Sub Saharan Africa ◽  
Innovative Development ◽  
Mobile Banking ◽  
Data Set ◽  
Financial Innovations ◽  
Sub Saharan

The article examines the relationship between financial innovation (mobile banking) variables in sub-Saharan Africa. Mobile banking (also known as mobile money) is one of the main financial innovations in the sub-Saharan region, and it is a system through which non-bank residents (residents without bank accounts, etc.) receive financial services. The overall importance of financial innovation in today’s digital and knowledge-based economy, and indeed, innovative development, inspired this study. Using a partial linear regression model, we analysed the International Monetary Fund data set, the World Bank’s national economic data, and mobile banking data from GSMA for the period from 2011 to 2017. A negative correlation was found between these variables and growth, as well as financial development, but a positive relationship was established between financial development and economic development. This positive relationship re-confirms the argument that financial development affects economic growth. It is recommended that policy makers develop and implement the necessary policy tools that can promote this form of financial innovation, and thus link its benefits to the national economy in general.

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