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This study aims to examine the impact of economic freedom and corruption on bank stability in sub-Saharan Africa (SSA).

This study uses 38 countries in SSA from 2008 to 2019 using system GMM technique.

The authors found that greater economic freedom increases economic efficiency through improving bank stability. Besides this, the authors also find that banks in environments with greater business freedom, financial freedom, trade freedom and investment freedom are less prone to solvency. The results also show that corruption improves bank stability, suggesting evidence of the “grease the wheels” hypothesis.

The results suggest to policymakers that a high economic freedom may be an appropriate policy toward enhancing bank stability. Besides this, the results also suggest to policymakers to prioritize addressing the core issues that encourage corruption to extort bribes.

This study provides insightful discussion on whether economic freedom and its subcomponents and corruption have an effect on bank stability in SSA.

This study aims to analyze the potential implications of economic freedom and competition for bank stability.

Using 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.

The 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.

The 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.

The 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.

The purpose of this paper is to provide a total factor productivity index for the African banking industry. It also investigates the impact of some internal and external determinants affecting bank productivity.

The biennial Malmquist productivity index and various regression models (ordinary least squares, Tobit and truncated bootstrapped regression) are employed in analyzing data from 120 banks in 24 African countries from 2007 to 2012.

The results indicate a general decline in productivity of banks in Africa, largely due to inadequate technological progress. State banks are found to be more productive than foreign and private banks. The regression analyses showed that non-executive directors, leverage, management quality, credit risk, competition and exchange rate have significant impact on bank productivity, but ownership and CEO-duality do not.

The results have implications for management of banks, governments and regulators. It shows the need for policy and investments that improve state-of-the art technology. The findings also seem to suggest poor management practices in input usage, especially in operational management, as well as costs emanating from non-interest sources. Bank managers need to address these deficiencies to improve productivity in African banking markets.

A major contribution of this paper is the productivity index provided for the African banking industry. This study is also the first to apply the biennial Malmquist to analyze productivity in the African banking industry.

This paper examines the effect of financial (banking) freedom and market power on bank net interest margins (NIM).

The study uses data from 11 sub-Saharan African countries over the period, 2006-2012, and the system generalized method of moments to assess how financial freedom affects the relationship between market power and bank NIM.

The authors find that both financial freedom and market power have positive relationships with bank NIM. However, there is some indication that the impact of market power on bank margins is sensitive to the level of financial freedom prevailing in an economy. It appears that as competition intensifies, margins of banks in freer countries are likely to reduce faster than those in areas with more restrictions.

Competition policies could be guided by the insight on how financial freedom moderates the effect of market power on bank margins.

This study provides new empirical evidence on how the level of financial freedom affects bank margins and the market power-bank margins relationship.

After completing this case, students should be able to: identify and compute relevant cash flows in relation to a real estate project and compute the net present value (NPV). Determine the target return or cost of capital (by looking at historical economic indicators). Design or formulate a sensitivity analysis to determine the drivers of the project value. Evaluate real estate and other investments taking qualitative and quantitative factors into consideration. Demonstrate the computation of a break-even rate to determine the minimum or maximum revenue or cost required for a project to be viable.

This case study is about the Golden Beak Securities Pension Fund that wanted to invest in a Hostel Project in one of the universities in Ghana. Most universities in Ghana faced an acute shortage of on-campus accommodation. Also, the Government of Ghana, in 2017, implemented a programme to make Senior High School in Ghana free. This was expected to increase the number of students who will enter the existing universities. The project was therefore seen as strategic, as it would help ease the pressure of on-campus accommodation while providing diversification for the pension fund. As part of the investment committee’s (IC) quest to improve the skill set available to it, especially in relation to real estate investments, Esi Abebrese was appointed as one of the members of the IC of GSB. Her main task was to collect information on key macroeconomic variables, as well as granular information on project costs and revenues and conduct investment appraisal. Esi was scheduled to make a presentation to the IC on the 15th of October 2019 following which the Committee will debate and make a decision. The project had an estimated cost of GH¢52m with a total number of 3,424 student beds and ancillary facilities. Undertaking the project required moving funds from investments in money market securities with one of the banks in Ghana. The investments in the money market securities were currently yielding about 16% a year. The determination of the cost of capital was critical and Esi and Nana eventually settled on a long-term weighted average cost of capital of 14%. This was after considering the trend of inflation, monetary policy rates, treasury rates, stock market returns and a report on returns on commercial real estate properties in Ghana. An exit capitalisation rate of 20% was also estimated for the purposes of determining the value of the property at the end of the investment horizon. Esi also obtained estimates of cost and revenue for the project and proceeded to carry out a feasibility analysis on the project. This consisted of an NPV analysis and sensitivity analysis on various factors to determine the drivers of the project value. The IC had to take several factors (both quantitative and qualitative) into consideration before making a decision. Esi believed that these factors included the diversification of the fund’s assets, the return on investment, potential oversupply of hostel accommodation, the social responsibility of providing student accommodation and the impact of any prolonged shutdown of the university.

Masters/advanced undergraduate.

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CSS 1: Accounting and Finance.

This study examines the gender gap in financial literacy in Ghana.

This study employs primary data and probit models together with the Oaxaca-Blinder decomposition strategy.

The authors found that males are generally more financially literate than females are. The results also show that much of the gender gap in financial literacy is explained by differences in coefficients or how literacy is produced and not by differences in the demographic and socio-economic characteristics of men and women. Thus, the gap may be attributable to unobserved behavioural and psychological traits, as well as cultural and social norms regarding gender roles in financial decision-making.

It is evident that further action is needed to bridge the gap between men and women with regards to financial literacy. Effective interventions may include improving women's access to financial information and education, as well as encouraging their participation in household financial decision-making and planning. In particular, less educated women need to be targeted by policy initiatives in this regard.

This study contributes to the scant literature on gender gap in financial literacy in developing countries.

The poverty puzzle persists in sub-Saharan Africa decades after some other regional bodies have recorded substantial gains in their poverty reduction efforts. This study seeks to explore the extent to which social inclusion influences poverty outcomes in sub-Saharan Africa.

The study constructs a social inclusion index and its sub-indices using principal component analysis and employs the Lewbel instrumental variable estimation method to test the impact of the computed social inclusion indices on poverty outcomes for 19 sub-Saharan African countries.

The results have shown that social inclusion reduces the proportion of the poor and the depth of poverty within sub-Saharan Africa significantly. We also observe a U-shaped relationship between social inclusion and poverty outcomes; thus, social inclusion’s poverty-reducing effect sees a reversal when it hits a certain threshold.

The study provides the evidence needed to inform the policy discourse on the poverty problem, which continues to plague sub-Saharan Africa.

With sub-Saharan Africa’s position as the region with the worst poverty statistics, the results of this study will prove useful in tackling poverty to ensure improved quality of life.

This study presents original evidence on social inclusion and its relationship with poverty.

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2023-0640

This study aims to investigate the influence of banking consolidations on bank stability in Sub-Saharan African (SSA) countries for the period 2003–2019, following a series of bank mergers and acquisitions (M&As) in the region and whether regulation-induced bank M&As affect banking sector stability.

The fixed effect panel regression model is used to understand the influence of regulation-induced and voluntary bank mergers and acquisitions on banking stability in SSA. The study also controlled for bank-specific factors, market concentration and macroeconomic variables that affect banking stability. The study used three measures of bank stability: the Z-score, risk-adjusted return on assets and risk-adjusted bank capital.

The study results reveal that voluntary bank M&As, market concentration, net interest margin, bank capital, bank deposits and income diversification influence banking sector stability positively. However, the findings show that regulation-induced bank mergers and acquisitions impact banking stability negatively. Where bank M&As were a result of banking regulatory reforms, called regulation-induced mergers and acquisitions (RIM&As), banking stability suffered, but voluntary bank M&As improved banking stability. Again, the study supports the concentration–stability argument rather than the competition–stability hypothesis. Therefore, more concentrated banking markets in SSA countries have more stable banks and fewer risks of system-wide bank failures. Other factors influencing banking stability in SSA are return on equity, bank efficiency (cost-to-income), bank size and deposits-to-assets ratio. However, their relationship is negative with the stability of the banking sector.

The findings imply that the regulatory authorities should encourage voluntary bank M&As and not regulation-induced bank M&As to improve the stability of the banking systems in SSA.

The study provides new evidence on the effects of regulation-induced bank M&As on the stability of banks.

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 study aims to determine how taxes can be used to bridge income inequality gap in sub-Saharan Africa (SSA).

A panel data set of 36 SSA countries was analysed using generalised method of moments.

The results suggest that an increase in direct taxes relative to indirect taxes has a positive significant impact on income inequality. This is mostly due to the progressive nature of direct taxes as compared to indirect taxes.

This research contributes to the scant literature on how specific tax components affect income inequality, especially in developing countries.