This study aims at examining the corporate governance mechanisms and their impact on performance of commercial banks in the absence of organized stock exchange. The study assessed the relationship between selected internal and external corporate governance mechanisms, and bank performance as measured by ROE and ROA. The study used structured review of documents, and commercial banks financial data were collected covering a period 2005 to 2011. The findings indicated that board size and existence of audit committee in the board had statistically significant negative effect on bank performance; whereas bank size had statistically significant positive effect on bank performance. Similarly, capital adequacy ratio, as a measure of external corporate governance mechanism, had statistically significant positive effect on bank performance. In addition, absence of organized stock exchange; high government intervention; lack of corporate governance awareness, absence of national standards of corporate governance, as well as accounting and auditing; and weak legal framework to protect minority shareholder rights are the major factors with adverse impact on corporate governance and bank performance in Ethiopia.

We examine the finance-growth nexus in South Africa accounting for the role of bond markets, stock markets, and bank and non-bank financial intermediaries using a vector autoregressive technique. Extant empirical literature has largely accounted for only banks and stock markets, ignoring bond market and non-bank financial intermediaries. We find that bond market development affects economic growth in South Africa, and no similar effect is observed for the bank and non-bank financial intermediaries and the stock market. Our finding shows that examination of individual elements of the financial system is important in understanding the unique effect of each on growth. The observation that the bond market rather than stock market, bank and non-bank institutions promote economic growth in South Africa induces an intriguing question as to what unique roles bond markets play that the intermediaries and equity market are unable to play. JEL Classification: G10, G21, O16

No abstract

Research on the impact of financial development on economic growth remains inconclusive. Previous empirical examination of the link is based on aggregate GDP on the presumption that each economic sector responds identically to financial development. However, the extent of credit utilisation, as well as productivity of credit, may not necessarily remain the same across sectors. This study therefore seeks to contribute to the literature by examining the effect of financial development across sectors in sub-Saharan Africa using the Generalised Method of Moments (GMM) over the period 1990-2018. Indeed, the findings show that while financial development has a positive effect on the service and agricultural sectors, a certain threshold of financial development must be reached before it can positively contribute to the growth of the industrial sector. The findings are robust to a different estimation technique. With the industrial sector considered critical for economic transformation, our findings imply that policymakers in sub-Saharan Africa need to continue to promote financial development to spur industrialization.

Purpose Although credit plays a crucial role in modern society, the increased availability of credit is partly responsible for higher levels of debt burden and household over-indebtedness. However, despite the serious consequences of over-indebtedness on household welfare our understanding of the factors that determine over-indebtedness and the link between over-indebtedness and poverty is limited. The purpose of this paper is therefore to identify drivers of over-indebtedness at an individual level and its link with poverty. Design/methodology/approach The authors analysed the determinants of over-indebtedness and its links with poverty employing a binary logistic regression model using data on 51,359 individuals from 11 economies in the Southern Africa Development Community. Findings The results suggest that over-indebtedness is driven by, among others, lack of credit literacy, cross-borrowing and income. The results also suggest that over-indebtedness is likely to impoverish the indebted. Practical implications Policies that encourage access to financial services such as credit should be designed such that increased financial inclusion does not aggravate poverty and inequality. Originality/value The authors used a unique financial inclusion survey that reports data on financial inclusion and poverty measures to identify the determinants of over-indebtedness and its link with poverty.

No abstract

No abstract

Efforts are being exerted in many developing countries to promote financial inclusion by increasing individuals’ access to financial products and services. However, literature suggests that increasing the supply of financial products and services per se may not help in expanding financial inclusion unless concerted efforts are exerted in enhancing financial literacy. This is because financially literate individuals are more likely to appreciate the value of financial services and hence take up financial products. This paper reports the link between financial literacy and inclusion using data from a demand side financial inclusion survey conducted in Kenya and Tanzania in 2016 covering a total of 6029 individuals. Results from our instrumental variable regression analysis confirmed that financial literacy is a strong driver of financial inclusion. This implies that efforts to promote financial inclusion need to be accompanied with financial literacy campaigns in both countries.