Search results

This paper seeks to examine the interrelationship between inclusive business, private sector credit and economic welfare in Africa.

The study uses the seemingly unrelated regression, system generalized method of moments and bootstrap quantile regression in a panel of 54 economies in Africa, over the period 2006–2020.

The authors show that countries that provide more credit to the private sector have better incentives to enhance the ease of doing business. The authors find that ease of doing business and domestic credit to the private sector have a positive and significant effect on economic welfare at higher quantile levels. The authors find that ease of doing business substitutes private sector credit to boost economic welfare, while business account complements private sector credit to boost economic welfare. The authors show that the marginal effect of inclusive business on economic welfare is greater in countries that provide more credit to the private sector.

The implication is that countries that focus on developing their private sector (through credit expansion) should be able to encourage or facilitate the inclusion of businesses to achieve a sustainable economic welfare.

The implication is that policymakers should be able to develop their business environment through inclusive financing so as to build business confidence in the society.

The paper examines the interrelationship between inclusive business, private sector credit and economic welfare in Africa.

This study aims to explore how institutional quality links digital financial inclusion to inclusive development in lower-middle-income countries, considering heterogeneities.

The study uses dynamic generalized method of moments to analyze a balanced panel data set of 48 lower-middle- income countries (LMICs) from 2004 to 2022, sourced from various databases. It assesses four variables and conducts checks for study robustness.

The study reveals a positive link between digital financial inclusion and inclusive development in LMICs, confirming theoretical predictions. Empirically, nations with quality institutions exhibit greater financial and developmental inclusion than those with weak institutions, emphasizing the substantial positive impact of institutional quality on the connection between digital financial inclusion and inclusive development in LMICs. For instance, the interaction effect reveals a substantial increase of 0.123 in inclusive development for every unit increase in digital financial inclusion in the presence of strong institutions. The findings provide robust empirical evidence that the presence of quality institutions is a key catalyst for the benefits of digital finance in inclusive development.

This study offers significant insights into digital financial inclusion and inclusive development in LMICs. It confirms a positive relationship between digital financial inclusion and inclusive development, highlighting the pivotal role of institutional quality in amplifying these benefits. Strong institutions benefit deprived individuals, families, communities and businesses, enabling full access to digital financial inclusion benefits. This facilitates engagement in development processes, aiding LMICs in achieving Sustainable Development Goals.

This paper aims to examine the interaction effect of regulations (monetary and macro-prudential) in explaining the possible non-linear effect of bank risk exposures (credit risk and insolvency risk) on banking stability in Africa.

The study uses a two-step system generalized method of moments (GMM) estimator for a data set of banks across 54 African countries over the period 2006–2020.

The authors find that the relationships between bank credit risk–bank stability and bank insolvency risk–bank stability are non-linear and characterized by the presence of optimal thresholds, which are 5.3456 for credit risk and 2.3643 for insolvency. Contrary to their positive effects below these optimal thresholds, credit risk and insolvency risk become negatively linked to bank stability in Africa. The authors find that macro-prudential action and monetary policy both have a positive and significant relationship with bank stability. The authors provide evidence to support that the marginal effect of excessive credit risk and insolvency risk on bank stability is reduced when interacted with monetary and macro-prudential regulations, and the impact is significant in strong institutional environment.

Future research should extend data to include developing and emerging economies in the world. Also, policymakers, researchers and practitioners should consider different regulatory and institutional frameworks in explaining the relationship between the thresholds of bank risk exposures and bank stability in the world.

Regulatory authorities should have to deeply reform their financial systems, develop risk-based regulatory framework and effective supervision mechanism relating to appropriate techniques that maintain an optimal and desired level of bank risks and risk-taking behaviours required to ensure a stable banking system.

To the best of the authors’ knowledge, this is the first study to examine how different regulatory frameworks shape the non-linear impact of bank risk exposures on bank stability in Africa.

Existent literature suggests that Africa is heavily endowed with agriculture resources and entrepreneurship remains an important mechanism for promoting national productivity and other economic outcomes. Despite these, empirical evidence on how agriculture resources promote the effect of entrepreneurship on national productivity in Africa is nonexistent given the abundance of agriculture resources and the need for Africa to increase its productivity, which has implications for improving welfare. Hence, this study aims to examine the interplay of how agriculture resources and entrepreneurship influence national productivity by way of exploring for threshold and complementarity effects of agriculture resources in Africa.

This uses panel data of 29 Africa economies between 2006 and 2016 in a bootstrap quantile regression model.

First, it is reported that initial levels of agriculture resources in the form of crop and arable lands reduce national productivity while the extreme increase in agriculture resources promotes national productivity in Africa. This implies a nonlinear direct U-shape effect of agriculture resources on national productivity indicating that the enhancing effect of agriculture resources on national productivity is only achieved beyond a certain threshold of average agriculture resources. Second, agriculture resources complement entrepreneurship (which initially reduced national productivity) to promote national productivity. This implies that there is a synergetic-complementarity relationship between entrepreneurship and agriculture resources on national productivity.

These findings suggest that governments that are interested in boosting national productivity through agriculture resources may have to commit more financial resources to develop and reclaiming more agriculture resources (in the form of crop and arable lands) given that some threshold of agriculture resources are needed to promote national productivity. Similarly, developing agriculture resources by policymakers can help complement entrepreneurship to further improve the effects of entrepreneurship on national productivity.

This study attempts to present first-time evidence on the interplay between agriculture resources and entrepreneurship on national productivity by way of exploring for threshold and complementarity effects of agriculture resources in Africa.

This paper aims to examine the effect of natural resources on the national productivity of high and low globalized economies in Africa.

This study uses two-step generalized method of moments dynamic panel data of 30 African economies between 2006 and 2016 to achieve the purpose of the study.

The results suggest that natural resources promote productivity within African economies regardless of the level of globalization. However, while natural resources have an overall enhancing effect on national productivity in both high and low globalized economies, the enhancing effect varies according to the forms of globalization. The findings of this study suggest that globalization can alter the nexus between natural resources and national productivity in Africa. The results imply that African Governments and their related policymakers can rely on globalization to promote the effect of natural resources on productivity of African economies.

This result is good and welcoming news, especially when natural resources in Africa have been described by prior studies as a curse to the continent. While globalization can be a tool for policymakers in Africa to deploy the positive effect of natural resources on national productivity, they might as well be careful as to which form of globalization they pursue, given that different forms and different levels or extent (high or low) of globalization yields different results on the nexus between natural resources and national productivity.

To the best of the authors’ knowledge, this study is the first of its kind to examine how natural resources affect national productivity in high and low globalized economies, especially in Africa.

This study aims to examine the hypothesis that the effect of insurer risks on profitability is conditional on regulation, using two main regulatory directives in the Ghanaian insurance market as a case study.

This study used the robust ordinary least square and random effect techniques in a panel data of 30 insurers from 2009 to 2015 to test the research hypothesis.

The results suggest that regulations on no credit premium and required capital have insignificant effects on profitability of insurers. On the contrary, this study documents evidence that both policies mitigate the effect of underwriting risk on profitability and suggests that regulations significantly mitigate the negative effect of underwriting risk to improve profitability.

The finding suggests that policymakers and regulators must continue to initiate, design and model regulations such that they help tame risk to improve the performance of insurers in Ghana.

This study provides first-time evidence on the role of regulations in controlling risks in a developing insurance market.

This study aims to investigate the coordinated impact of regulations on the predicted probability of a banking crisis in Africa.

The study used the dynamic panel instrumental variable probit regression model of 52 African economies over the period 2006 to 2018.

The authors observe that banking crisis is persistent for few years but dissipates in the long run. The results show that board mechanism and ownership control are important in reducing the likelihood of banking crisis. The authors found a negative impact of regulatory capital and monetary policy on the predicted probability of a banking crisis while regulatory quality was not strong in reducing the likelihood of banking crisis. There was also evidence to support that regulatory capital and monetary policy augment the negative impact of board mechanism and ownership control on the predicted probability of a banking crisis.

The limitation of the study is that it did not explore all measures of regulatory framework and how they impact banking crisis. However, it has an advantage of using alternative measures of regulations in a banking crisis probability model. Therefore, future studies should include other macro-prudential regulations, regulatory environments and supervision and observe how they are coordinated to reduce possible crisis in a robust methodological framework.

The research has policy implications for monetary authorities and policymakers to set coordinated regulations through internal banking mechanisms that are relevant in sustaining banking system stability goals. Countries in Africa should strengthen their quality of regulation in such a way that it can play a strong and complementary role to a robust internal control mechanisms, so as to maintain stability in the banking system. In general, regulators and policymakers should design greater coordination of external and internal regulations through a single regulatory framework and a common resolution mechanism that make the banking system more robust in curbing possible crisis.

The policy implication of the study is to build banking confidence in the society.

This study analyses the interactions of different components of internal and external regulatory framework in helping to reduce the probability of a banking crisis in Africa.

The purpose of this paper is to examine the effect of funding structure on technical efficiency of banks in Ghana, between 2011 and 2016.

Employing the random-effect and the truncated panel data of 25 banks, the results present new evidence.

The findings reveal that Ghanaian banks are less technically efficient, as the average efficiency scores generated is below the threshold of 1. Furthermore, the results show that banks in Ghana finance their operations mainly with deposit source of funding. The results reveal a significantly positive relationship between funding structure and technical efficiency. However, internally generated source of funds was negatively linked with technical efficiency. This is not surprising because banks that rely on external funds attract higher costs than internally generated funds, and this puts pressure on managers to perform. The results are relevant to emerging economies when the authors use additional macroeconomic factors.

Thus, a proportionally larger deposit base funding would typically lead to an overall increase in technical efficiency of banks in Ghana. Shareholders should put pressure on managers to plough back earnings in order to increase the use of internally generated funds, thus, increasing technical efficiency. Banks that are inefficient should make some adjustments to their weights of inputs and/or outputs combinations by following their benchmark banks (efficient banks) to improve their efficiency.

The results of this study have important implications for regulators, investors and policy makers, particularly an emerging economy. The implication of the study to investors is that investors should be able to identify an appropriate source of funds that can be used efficiently to maximize their wealth in emerging markets. It is important for regulators and managers of banks to improve technical efficiency by considering the role that macroeconomic and monetary environment play when identifying and using various sources of funds as a strategy to improve bank efficiency.

Consequently, future research should investigate the impact of funding structure on technical efficiency for other regions and considering their interactions with institutional quality, macroeconomic factors and financial stability.

To the best of the authors’ knowledge, the study is the first to fulfill an urgent need to explore a robust approach of measuring technical efficiency and funding structure within the context of banks over six-year period, prompting insightful avenues to the survival, growth and performance of financiers in emerging economy.

The purpose of this study is to assess how inclusive education affects inclusive economic participation through the financial access channel.

The focus is on 42 sub-Saharan African countries with data for the period 2004-2014. The empirical evidence is based on the generalised method of moments.

The following findings are established. First, inclusive secondary education moderates financial access to exert a positive net effect on female labour force participation. Second, inclusive “primary and secondary school education” and inclusive tertiary education modulate financial access for a negative net effect on female unemployment. Third, inclusive secondary education and inclusive tertiary education both moderate financial access for an overall positive net effect on female employment. To provide more gender macroeconomic management policy options, inclusive education thresholds for complementary policies are provided and discussed.

Policy implications are discussed in the light of challenges of economic development in the sub-region and sustainable development goals.

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.

The generalized method of moments is used as empirical strategy.

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.

Policy implications are discussed with emphasis on sustainable development goals.