What influence bank lending in Sub-Saharan Africa

Abstract

This article analyses the broad determinants of bank lending in Sub-Saharan Africa (SSA) using both micro-bank and macro-country level data of 264 banks across 24 SSA countries. The core finding is that the structure of banking markets influences credit delivery in SSA in an environment where the financial sector is reformed and banks are allowed to operate freely. Also, there is an evidence to suggest a link between bank credit and the financial strength of the banks. The overall results suggest that regulatory initiative, which restricts banking activities, imposes severe entry requirements and requires high regulatory capital, influences banks’ decisions to supply loans.