Department of Banking and Finance

Permanent URI for this collectionhttp://197.255.125.131:4000/handle/123456789/23056

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Author: search.filters.author.Agbloyor, E.K.

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Now showing 1 - 10 of 23
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    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.
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    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.
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    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.
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    Regulations and banking crisis: lessons from the African context
    (Journal of Financial Regulation and Compliance, 2022) Ofori-Sasu, D.; Agbloyor, E.K.; Kuttu, S.; Abor, J.Y.
    Purpose: This study aims to investigate the coordinated impact of regulations on the predicted probability of a banking crisis in Africa. Design/methodology/approach: The study used the dynamic panel instrumental variable probit regression model of 52 African economies over the period 2006 to 2018. Findings: 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 regulatory capital and monetary policy augments the negative impact of board mechanism and ownership control on the predicted probability of a banking crisis. Research limitations/implications: 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. Practical implications: 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 crisisSocial implications: The policy implication of the study is to build banking confidence in society. Originality/value: 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.
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    Foreign bank and banking stability in Africa: does strong and weak corporate governance systems under different regulatory regimes matter?
    (Journal of Financial Economic Policy, 2021) Kusi, B.A.; Agbloyor, E.K.; Abor, J.; Simplice, A.A.
    Purpose: The purpose of this paper is to examine the effect of foreign bank assets (FBA) and (FBP) presence is examined in terms of banking stability in the economies with strong and weak country-level corporate governance (CLCG) in Africa between 2006 and 2015. Design/methodology/approach: Using a Prais-Winsten panel data model of 86 banks in about 30 African economies: findings on how FBA and presence influence banking stability in strong and weak corporate governance economies under different regulatory regimes are reported for the first time in Africa. Findings: The findings show that foreign bank presence (FBP) and assets promote banking stability. However, the positive effect of FBA and presence is enhanced in economies with strong CLCG, whereas the positive effect of FBA and presence is weakened in economies with weak CLCG. After introducing different regulatory regimes, it is observed that the enhancing effect of FBP and assets on banking stability in the full sample and economies with strong and weak CLCG systems are deepened or improved under the loan loss provisional regulation regime. However, under the private and public sector-led financial transparency regulations, the reducing effect of FBP and assets on banking stability in economies with weak corporate governance systems is further dampened. Practical implications: These findings show that the relationship between FBP and assets is deeply shaped by corporate governance systems and regulatory regimes in Africa. Hence, policymakers must build strong corporate governance and sound regulatory regimes to enhance how foreign bank operations promote banking stabilityOriginality/value – This study presents first-time evidence on how FBA and presence influence banking stability under strong and weak governance systems while considering different regulatory regimes.
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    Bank Ownership Types and Liquidity Creation: Evidence from Ghana
    (Journal of African Business, 2021) Kusi, B.A.; Kriese, M.; Agbloyor, E.K.; et al.
    In this study, we examine bank liquidity creation and the effect of ownership types on liquidity creation in Ghana for the first time. The study employs data on 26 banks obtained from Bank of Ghana between 2006 and 2016. Three panel estimation strategies, including two-step GMM, Hausman-Taylor and Fixed effect models, employed to arrive at the findings. Employing the narrow liquidity creation computation approach, the results show that average bank liquidity created within the 11-year period consistently increased over the period and reported the highest liquidity created in 2016. Interestingly, when considering bank ownership types, listed, state-owned, and foreign-owned banks report the highest average liquidity created compared to their unlisted, privately owned and locally owned counterparts, respectively. Employing regression models, the study finds that foreign and privately owned banks are less likely to create more liquidity compared to their locally and state-owned bank counterparts, implying that state-owned and locally owned (domestic) banks create more liquidity. These results imply that while there is much room for creating more liquidity, policymakers may hasten liquidity creation through locally and state-owned banks while at the same time designing policies that entice foreign and privately owned banks to create more liquidity, which is good for economic growth.
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    Do countries’ geographical locations moderate the tourism-led economic growth nexus in sub-Saharan Africa?
    (Tourism Economics, 2021) Baidoo, F.; Agbloyor, E.K.; Fiador, V.O.L.; Marfo, N.A.
    Debates on the intricacies of tourism’s potential contribution to economic growth remain imperative and unsettled in sub-Saharan Africa (SSA). Employing dynamic models and multiple robust estimation techniques, this article empirically tests the tourism-led growth hypothesis (TLGH) in the case of SSA. Further investigations on countries’ geographical locations influence the TLGH are conducted. With panel data spanning from the year 2000 through 2016, on 40 SSA countries, which were regrouped into coastal, landlocked and islands, the study establishes evidence in support of the TLGH for the full sample. After geographical classifications, tourism’s impact on economic growth is, however, observed to be significantly positive for only landlocked and coastal countries. Surprisingly, the impact of tourism on economic growth is significantly negative for islands within the subregion. The findings hold policy implications for the pursuit of tourism-led growth in the SSA region
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    How do anti-money laundering systems affect FDI flows across the globe?
    (Cogent Economics & Finance, 2022) Ofoeda, I.; Agbloyor, E.K.; Abor, J.Y.
    This paper is a systematic attempt to establish the effect of anti-money laundering (AML) systems on FDI flows across the globe. Complex and related hypotheses are tested using data from 2012 to 2018 across 165 economies across different continents, income levels, and regulatory environments. First, the paper examines the effect of AML systems on FDI flows. Second, the paper examines the nonlinearities of the AML systems-FDI nexus. Third, the paper examines whether country peculiarities such as an offshore financial centre (OFCs) or originating from Africa alters this relationship. The paper employs the two-step system GMM and the dynamic panel threshold regression techniques to test the hypotheses of the study. Generally, the paper provides evidence that AML systems positively promote FDI inflows. However, the paper finds that AML structures dampen FDIs inflows for OFCs. Further, the paper finds that the influence of AML systems on FDIs is threshold-specific. Specifically, AML systems positively impact FDIs below the threshold for our full, developing, and African country samples. At the same time, the study finds a negative impact of AML structures on FDIs above the threshold value for our full sample and developing countries. However, for Africa, the study provides evidence of a positive impact of AML systems on FDIs across the different AML structures. Again, the study finds that AML systems negatively impact FDI across all AML
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    Foreign direct investment, anti-money laundering regulations and economic growth
    (Journal of International Development, 2021) Ofoeda, I.; Agbloyor, E.K.; Abor, J.Y.; Achampong, K.O.
    This study seeks to establish the impact of anti-money laundering (AML) regulations on economic growth as well as how AML regulations influence the foreign direct investment (FDI)-growth nexus for 165 economies across the globe. We employ Prais-Winsten and Hansen (2000) panel threshold regression estimation techniques to test the hypotheses of the study. We use data ranging from 2012 to 2018. We provide evidence that AML regulations generally stimulate growth; however, AML regulations only stimulate growth below the threshold value. Again, although we report that FDI stimulates growth, the growth-enhancing impact of FDI is more pronounced at higher levels of AML regulations.
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    Anti-money laundering regulations and financial sector development
    (International Journal of Finance & Economics, 2020) Ofoeda, I.; Agbloyor, E.K.; Abor, J.Y.; Osei, K.A.
    This paper is aimed at establishing the effect of anti-money laundering regulations on financial sector development across the globe. Using data from 2012 to 2018 across 165 economies across different continents, income levels and regulatory environments, we test a number of complex and related hypotheses. (a) We examine the effect of anti-money laundering regulations on financial sector development. (b) We examine if this effect differs across developing countries and developed economies. (c) We examine the nonlinearities in the anti-money laundering regulations-financial sector development nexus. We use the Prais-Winsten approach and the panel threshold estimation approaches to test our hypothesized relationships. We find evidence that anti-money laundering regulations generally promote financial sector development; however, this positive effect is concentrated in developing economies. We also find evidence of threshold effects of anti-money laundering regulations for our sample. Consistent with the earlier findings, the positive effect of anti-money laundering regulations on financial development is concentrated in countries below the threshold value of anti-money laundering regulations. These countries are mostly developing countries. Our findings suggest that strengthening anti-money laundering regulations will be beneficial to developing countries.