PurposeThis study examines how institutional quality influences variability in financial development among economies in Sub-Saharan Africa (SSA).Design/methodology/approachEmpirical estimations verifying various relationships are performed using the limited information maximum likelihood (LIML) estimation technique.FindingsThe results suggest that institutional quality enhances the pace of financial development among economies in the sub-region all things being equal. In a further micro-level analysis where components of institutional quality index are examined separately, the study’s results suggest that effective governance, regulatory quality, rule of law and accountability tend to have a significant positive impact on financial sector development.Research limitations/implicationsFindings of the study suggest that policies geared towards improving governance and regulatory institutions can augment development of the financial sector among economies in SSA; governments and policymakers are therefore encouraged to resource noted institutions to play effective roles for the development of the financial sector.Originality/valueCompared to related studies, this study reorients existing paradigm, which emphasizes the role of governance and institutional variables in the economic growth discourse. The authors’ empirical inquiry rather focuses on how governance and institutional structures influence regional financial development dynamics. Specifically, this study differs from most macro-level studies found in literature because it examines the impact of hitherto unexamined governance and institutional variables on financial development among economies in SSA.

PurposeThis paper aims to examine the effect of volatility in prices of internationally traded commodities (the backbone of most economies) on the stability of the banking industry from three main perspectives; bank liquidity reserves, overall bank risk and bank capital adequacy.Design/methodology/approachData were compiled from various sources for 30 emerging economies from 2002 to 2018 and were analyzed using the two-step system generalized method of moments estimation technique.FindingsThe study finds that all things being equal, the magnitude and direction of impact of commodity price volatility on bank stability among economies in Sub-Saharan African (SSA) depend on the type and nature of the commodity in question; and the bank stability proxy used. For instance, an increase in crude oil prices is found to foster stability in the banking industry (proxied by bank liquid reserves) but insignificant when stability in the banking industry is proxied using other banking sector parameters. Additionally, government effectiveness and corruption control have varying moderating influences on how volatility associated with prices of internationally traded commodities influence various proxies for banking industry stability.Originality/valueThis study highlights the effect of fluctuations in prices of key internationally traded commodities (adjusted for foreign exchange impact) that are important sources of revenue among economies in SSA on banking sector stability from liquidity, overall risk and capital adequacy perspectives. The influential role of governance in the relationship between volatility in the price of commodities and bank stability is also revealed by the study.

Purpose This paper evaluates how institutions of governance and macroeconomic uncertainty influence efficiency of financial institutions in the subregion of Sub-Saharan Africa (SSA). Data for the empirical inquiry were compiled from relevant sources for 33 countries in the subregion from 2002 to 2019. Empirical estimates verifying hypothesized relationships were carried out using the continuous updating estimator (CUE) by Hansen et al. (1996). Design/methodology/approach The purpose of this paper is to evaluates how institutions of governance and macroeconomic uncertainty influence efficiency of financial institutions in the subregion of Sub-Saharan Africa (SSA). Data for the empirical inquiry were compiled from relevant sources for 33 countries in the subregion from 2002 to 2019. Empirical estimates verifying hypothesized relationships were carried out using the continuous updating estimator (CUE) by Hansen et al. (1996). Findings The results suggest that institutional quality has significant positive effect on financial institution efficiency, supporting the view that improved and supportive structures of governance tend to promote operational efficiency among financial institutions among economies in SSA. In addition, improvement in individual governance indicators such as corruption control, government effectiveness, regulatory quality and rule of law was also found to support or enhance efficiency of financial institutions among economies in the subregion. Macroeconomic uncertainty on the other hand is found to impede efficiency of financial institutions; the same condition (macroeconomic uncertainty) is further found to negate any positive impact corruption control, government effectiveness, regulatory quality and rule of law have on operational efficiency among financial institutions in the subregion. Originality/value Unlike most of related studies, this study adopts a different approach on the dynamics of financial institutions. Approach pursued in this empirical inquiry examines how the regulatory environment within which financial institutions operate, the form of governance and the quality of government institutions influence efficiency of financial institutions among emerging economies in Sub-Sahara. Empirical analysis conducted examines effects of variables that are unique to this study; these variables are either constructed or econometrically derived specifically for various interactions verified in the study. For instance, institutional quality variable is an index constructed specifically for this study using principal component analysis approach.

PurposeThis study seeks to examine the extent to which strands of inflationary related conditions (inflation expectations, inflation uncertainty and realized inflation); macroeconomic uncertainty and the likelihood of recessionary conditions influence performance indicators in the US banking sector over a specified time period.Design/methodology/approachThe study adopts seemingly unrelated regression model (SUR) advanced by Zellner (1962) in its examination of how specific strands of inflationary conditions, and other adverse macroeconomic conditions influence performance dynamics in the US banking sector.FindingsEmpirical evidence suggest that among various adverse macroeconomic conditions examined, inflation expectations and macroeconomic uncertainty tend to have significant constraining impact on key performance indicators in the US banking sector than other conditions examined. Comparatively, this study finds that inflation expectations and macroeconomic uncertainty tend to have much more constraining impact on return on equity, than on return on assets in the US banking sector. Results further suggest that among the three bank performance indicators examined, net interest margin is the least vulnerable bank performance indicator to various adverse macroeconomic conditions examined in the study.Practical implicationsApart from the various empirical results noted above, this study's findings are projected to help inform strategic planning decisions among institutions in the banking sector. The various findings could, for instance, inform policies and operational strategies geared toward reducing vulnerability associated with specific performance indicators such as return on equity. This reduction could be achieved by critically examining how the various performance indicators react to individual adverse macroeconomic conditions examined in this study. The process could ultimately help in developing tailored measures/procedures aimed at reducing how susceptible key performance indicators are to the various adverse macroeconomic conditions. This study's findings could also provide the platform for more adaptive policies aimed at minimizing the effects of noted macroeconomic conditions on operational efficiency in the banking sector.Originality/valueThe uniqueness of this study, compared to related ones found in the literature, stems from its treatment of three variant of related strands of macroeconomic condition (different variant of inflationary conditions) in the same framework in its empirical analysis.

This study examines how specific macroeconomic conditions influence US Corporate Profit Growth in a dynamic trend framework. Using Autoregressive Distributed Lag (ARDL) co-integration approach, this study evaluates short and long-run dynamics of corporate profit growth in an environment characterized by specific macroeconomic conditions. Our results show that trends in corporate profit growth are not entirely immune to macroeconomic perturbations or constrained economic conditions as recent corporate profit growth conditions seem to suggest. We find that although modeled macroeconomic conditions (Note 1) have no statically significant impact on corporate profit growth in the short run; in the long run, conditions such as macroeconomic uncertainty, inflation expectation and fiscal policy volatility depresses or have significant constraining effect on corporate profit growth.

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This study examines the impact of macroeconomic risk on political stability, using data compiled from 38 countries in the sub-region of sub-Saharan Africa (SSA), from 1996 to 2018. Macroeconomic risk index employed in this study is constructed using principal component analysis (PCA) from key economic variables. Empirical estimates verifying the relationship in question are conducted using the two-step system generalized method of moments (TS-SGMM) estimation technique. Presented empirical estimates suggest that macroeconomic risk has an adverse impact on political stability, all things being equal. Reported coefficient estimates further suggest that improvement in rule of law among economies in the sub-region significantly moderates the negative impact exerted on the political environment by macroeconomic risk. Coefficient estimates additionally suggest that improvement in governance and institutional variables (corruption control, government effectiveness, regulatory quality and rule of law) augment efforts at promoting political stability even in an environment characterized by volatile output growth.

Purpose This paper aims to examine the impact of commodity price changes (crude oil, cocoa, coffee, cotton and gold) on the international market on development (development proxied by the human development index) (HDI) among emerging economies in Sub-Saharan Africa (SSA). Design/methodology/approach Empirical estimates verifying theorized relationships in question were performed using the two-step system generalized method of moments framework. Findings Results from the empirical estimates suggest that a percentage increase in the prices of crude oil, cocoa and gold in the world market have a significant positive influence on development among economies in the sub-region all things being equal; however, similar price changes in cotton and coffee showed a negative effect on development. Further empirical estimates suggest that the extent to which prices of key commodities such as crude oil, influence development in the sub-region benefit less from institutional variables such as government effectiveness, corruption control and political stability. The same institutional variables, however, were found to augment how changes in cocoa prices influence development among economies in the sub-region. Originality/value This study specifically examines the extent to which commodity price fluctuations impact a holistic measure of development, (HDI which inherently captures economic growth) among emerging economies such as those in the SSA region, and how such relationship may be moderated by conditions such as corruption control and government effectiveness. The review suggests that such a study is rare, did not find any specific empirical inquiry focusing on what this study is designed to accomplish. A major gap or deficit identified among most reviewed studies is the failure to verify how the surmised relationship between movements in prices of commodities traded on the international market and development is moderated by institutional factors such as corruption control, government effectiveness and political stability. This study specifically examines such interaction effects in its empirical analysis.