Bank Deposit Mobilization, Loan Advancement and Financial Stability: The Role of Bank Branches in an Emerging Market
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Date
2021
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Journal of African Business
Abstract
This study investigates the relationship between bank branches,
financial intermediation and financial stability in Ghana using 35
banks between 2009 and 2017. Employing a panel, two-step
dynamic GMM model, a non-linear “inverted U-shaped” relationship
is documented between bank branches and financial stability. This
implies that initial increases in bank branches promote financial
stability but beyond 191 and 173 bank branches, bank branching
derails banking stability. The findings further reveal that bank
branches enhance the positive effects of deposits on bank stability
whilst reducing the negative consequences of bank lending on
financial stability. These findings imply that while bank management can rely on bank branches to enhance loans and deposits in
promoting banking stability, bank management should also be
cautious about the number of bank branches they keep giving
that beyond a certain threshold, it may impede stability.
Description
Research Article
Keywords
Banks, Loans, Branches