Department of Banking and Finance
Permanent URI for this collectionhttp://197.255.125.131:4000/handle/123456789/23056
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Item Financial inclusion and inclusive growth in Africa: What is the moderation role of financial stability?(Cogent Economics & Finance, 2023) Iddrisu, K.; Abor, J.Y.; Doku, J.N.; Dziwornu, R.This article aims to explore the interplay between financial stability, financial inclusion and inclusive growth in 40 African countries during the period 2004–2020. It acknowledges that an unstable financial system has the potential to erode confidence and hinder the essence of financial inclusion in promoting inclusive growth. However, studies regarding the combined effect of financial inclusion and financial stability on inclusive growth are hard to find, especially in Africa. By examining the effects of financial inclusion on inclusive growth and the synergistic relationship between financial stability and inclusive growth, this study seeks to shed light on how these factors interact in the context of African economies. To To cater for endogeneity issues, we used a two-step system-generalized method of moment. Our result reveals three outcomes: First, financial inclusion promotes inclusive growth. Second, financial stability alone is less effective at enhancing inclusive growth. Lastly, financial stability forms synergy with financial inclusion to further spike inclusive growth. It is recommended that policymakers strive to enhance financial inclusion by promoting financial stability.Item Effective monetary policy, banks’ pricing behaviour and human development in Africa(International Journal of Banking Accounting and Finance, 2022) Iddrisu, A.G.; Abor, J.Y.; Andani, A.This paper empirically examines the effect of monetary policy effectiveness on human development in Africa. We employ both micro-bank level and macro-country-level data. Bank-level data is taken from the bank scope database maintained by Fitch, IBCA, and Bureau Van Dijk. Series are yearly, covering a sample of 320 banks across 29 African countries. Panel fixed effects, random effects and IV regressions were estimated for the period 2002 to 2013. For our IV estimation, the paper explores an instrumental variable based on the fact that effective monetary policy is conditional on the independence of the central bank. The regression results that ensued suggest that first, effective monetary policy translates to high banks’ loan and deposit prices. Building on these results and employing various specifications of banks’ pricing strategy, the second test suggests that high banks’ pricing induced by effective monetary policy tends to increase human development. Results of the net effects eventually suggest that effective monetary policy, overall, does not improve human development.Item Debt Financing, Information Sharing, and Profitability: Evidence from Listed Firms from an Emerging Economy(Journal of African Business, 2023) Osei, J.O.; Sarpong-Kumankoma, E.; Abor, J.Y.This study investigates how credit information sharing conditions debt financing to boost the profitability of 20 listed enterprises on the Ghana Stock Exchange between 2003 and 2013. We employ robust least squares and simultaneous bootstrapping models in a panel setting. Our findings show that the impact of debt financing profitability increases when it is subject to information sharing and takes the shape of short, long, and total debts. In the worst-case situation, contingent debt financing reduces the negative impact of debt financing on profitability. Therefore, authorities must adopt laws and legislation that deepen, widen, and strengthen credit information sharing to offset the negative impact of information asymmetry on loan financing and business profitability.Item Bank lending behaviour and systemic banking crisis in Africa: The role of regulatory framework(Journal of International Development, 2022) Ofori-Sasu, D.; Agbloyor, E.K.; Kuttu, S.; Abor, J.Y.We examine how regulatory framework shapes the impact of bank lending behaviour on the probability of systemic banking crisis by using data from 52 African countries over the period 2006–2018. The study found that banks that lend beyond a certain level of threshold have the greater probability of causing a systemic banking crisis. The study provides empirical evidence in support of the argument that Above-average lending behaviour reduces the predicted probability of a systemic banking crisis in the presence of audit independence, stringent capital regulatory requirements, central bank independence and monetary policy framework.Item Do sustainability ethics explain the impact of country-level corporate governance on financial stability in developing economies?(Journal of Sustainable Finance & Investment, 2023) Ofori-Sasu, D.; Donkor, G.N.A.; Abor, J.Y.The study presents empirical evidence on how sustainability ethics affect the relationship between country-level corporate governance and financial stability in developing countries. Employing the dynamic system Generalized Method of Moments on a panel dataset of 137 developing countries over the period, 2006–2019, the study found that the positive effect of country-level corporate governance framework on financial stability is not instantaneous. We find that internal and external corporate governance frameworks have a strong positive synergistic effect on financial stability. We confirm that corporate governance measures substitute sustainability ethics to yield a desirable outcome of financial stability. Finally, the study finds evidence to support that sustainability ethics reduce the negative impact of country-level corporate governance on financial stability. The study recommends that the build-up of quality sustainability ethics can help tame the reductive effect of the country-level corporate governance framework on financial stability in developing countries.Item Entrepreneurship, foreign direct investments and economic wealth in Africa(Cogent Business & Management, 2023) Ofori-Sasu, D.; Dzisi, S.; Abor, J.Y.The paper seeks to examine the joint effect of entrepreneurship and FDI inflows on economic wealth in Africa. It employs a dynamic system called GMM for a panel dataset of 52 African economies between 2006 and 2020. The study finds that FDI inflows induced a negative impact on the ease of doing business but it increased the business capital start-ups of entrepreneurs. We find that entrepreneurship reduces economic wealth in the short term but in the long- term, entrepreneurship positively affect economic wealth. The results show that FDI inflows increase economic wealth and that FDI is an important channel through which entrepreneurship can impact economic wealth. We find evidence to support the ease of doing business and FDI inflows are substitutes, while minimum capital of starting business complements FDI inflows in determining economic wealth. Based on the marginal effects, we conclude that entrepreneurship reduces economic wealth but improves economic wealth when the level of FDI inflows increases in a country. The implementation is that countries should provide strategies that promote economic wealth. individuals, people and entrepreneurs through prudent business development frameworks and FDI support in the short term.Item Central bank coordinated policies and bank market power: an insight from the African context(Cogent Economics & Finance, 2023) Ofori-Sasu, D.; Agbloyor, E.K.; Sarpong-Kumankoma, E.; Abor, J.Y.The paper examines the impact of central bank regulatory policies on market power in Africa. The study presents a representative sample of 52 African economies over the period 2006–2020. The study shows that the individual regulatory policies of the central bank (i.e. monetary and macro-prudential policies) enhance banks’ market power. Also, it reveals that central bank's regulatory policies are better coordinated, as complements, in achieving greater market power. banks in countries with strong central bank independence (CBI) framework. However, the coordinated policies are substitutes in determining bank’s market power in countries with weak CBI framework. The policy implication is that the right policy mix of coordinated central bank regulatory policy framework is important in determining an optimal outcome of bank’s market power in both an inclusive central bank (monetary-prudential) policy targeting economies and an independent policy targeting economies.Item Does China’s Flow of FDI and Institutional Quality Matter for Poverty? Evidence from Sub-Sahara Africa(Journal of Asian and African Studies, 2023) Iddrisu, K.; Abor, J.Y.; Insaidoo, M.; Banyen, K.T.The study adds to the discussion on the necessity for Sub-Saharan African (SSA) countries to eradicate poverty, as outlined in SDG 1 and Africa’s Agenda 2063. This contribution was successful in achieving some key objectives. First, we examine the impact of Chinese FDI and institutional quality on the eradication of poverty in SSA. Second, we test empirically whether institutional quality can help Chinese FDI to reduce poverty in SSA. Using an annual dataset for 36 SSA countries for a 20-year period ending in 2020, our pooled OLS results showed that Chinese FDI does not reduce poverty unless there are strong institutions and good governance. Also, the results showed that strong institutions and good governance reduce poverty in SSA. As a result, we recommend that governments establish policies to develop systems and structures that encourage industrialization and attract foreign investors for SSA to reap the full benefits of Chinese FDI.Item Market Power and Bank Lending in Africa: The Role of Regulatory Policy(Journal of African Business, 2023) Ofori-Sasu, D.; Agbloyor, E.K.; Kuttu, S.; Abor, J.Y.The paper investigates how regulatory policy modulates the complex relationship between market power and bank lending. The empirical evidence is based on the seemingly unrelated panel regressions by employing a dataset of 52 African countries for the period, 2006–2018. The study finds a U-shaped relationship between market power and bank lending. The study shows that the estimated thresholds fall within the range of -4.38 to 9.67 of market power. It observes that the thresholds of market power in countries with stringent regulatory policies have relatively greater than countries operating in low regulatory policy regimes. The study shows a negative and direct effect of market power on lending. In the light of interactions, the conditional effects are estimated to provide meaningful interpretations. This is relevant to policymakers because our established conditional effects imply that regulatory policy is a sufficient complementary condition for reducing the negative effect of market power on bank lending.Item Ownership structure of oil revenues: Political institutions and financial markets in oil-producing countries(Journal of Multinational Financial Management, 2022) Mohammed, J.I.; Fiador, V.O.; Karimu, A.; Abor, J.Y.This study examines the impact of the ownership structure of oil revenues on financial markets and institutions, and the intermediating role of political institutions. Using the fixed-effects model and GMM for robustness, we analyse data from 82 oil-producing countries. We found several key results. Firstly, government ownership of oil revenues undermines the efficiency of financial institutions when the quality of political institutions is weak but enhances their efficiency when political institutions are strong. Secondly, the impact of private ownership of oil revenues is negative on the depth of and access to financial institutions when the quality of political institutions is weak, but positive when political institutions are strong. We observe similar threshold effects for the depth of and access to financial markets in the subsample of developing countries. We conclude that oil-producing countries need solid political institutions to benefit from oil wealth and to boost financial development.