Country-Level corporate governance and Foreign Portfolio Investments in Sub-Saharan Africa: The moderating role of institutional quality

Agyei, Samuel Kwaku; Isshaq, Mohammed Zangina; Abeka, Mac Junior; Gatsi, John Gartchie; Boateng, Ebenezer; Amoah, Emmanuel Kwakye

doi:10.1080/23322039.2022.2106636

Cited by 9 publications

(4 citation statements)

References 64 publications

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“…North (1991) defines institutions as "human constraints that structure political, economic and social interactions". Also, institutions are a human factor that controls the market environment (North, 1990;Agyei et al, 2022;Ahmad et al, 2022). Quality institutions are mostly explained with the World Governance Indicators (WGIs), which are regulatory quality, political stability, voice and accountability, control of corruption, governance effectiveness and rule of law (Husso, 2021;Samadi and Alipourian, 2021).…”

Section: The Role Of Quality Institutionsmentioning

confidence: 99%

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Bank capital and liquidity creation in Sub-Saharan Africa: the role of quality institutions

Bawuah

2024

AJEMS

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PurposeThis study investigates the relationship between bank capital and liquidity creation and further examines the effect that institutional quality has on this relationship in Sub-Saharan Africa (SSA).Design/methodology/approachThe data comprise 41 universal banks in nine SSA countries from 2010 to 2022. The study employs the two-step system generalized methods of moments and further uses alternative estimators such as the fixed-effect and two-stage least squares methods.FindingsThe empirical results show that bank capital has a direct positive and significant effect on liquidity creation. In addition, the positive effect of bank capital on liquidity creation is enhanced, particularly in a strong institutional environment. The results imply that nonconstraining capital regulatory policies bolster bank solvency, improve risk-absorption capacity and increase liquidity creation.Practical implicationsThis study has several policy implications. First, it provides empirical evidence on the position of banks in SSA on the financial fragility and risk-absorption hypothesis of bank capital and liquidity creation debates. This study shows that the effect of bank capital on liquidity creation in SSA countries is positive and supports the risk-absorption hypothesis. Second, this study highlights that a country's quality institutions can complement bank capital to increase liquidity creation. In addition, this study highlights that nonconstraining capital regulatory policies will bolster bank solvency, improve risk-absorption capacity and increase liquidity creation.Originality/valueThe novelty of this study is that it introduces the country's quality institutional environment into bank capital and liquidity creation links for the first time in SSA.

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Section: The Role Of Quality Institutionsmentioning

confidence: 99%

“…North (1991) defines institutions as “human constraints that structure political, economic and social interactions”. Also, institutions are a human factor that controls the market environment (North, 1990; Agyei et al. , 2022; Ahmad et al.…”

Section: Literature Reviewmentioning

confidence: 99%

Bank capital and liquidity creation in Sub-Saharan Africa: the role of quality institutions

Bawuah

2024

AJEMS

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“…(2022) also stated that overseas investment is the key driver of the national development and economic growth. Furthermore, inflows of FPI have several benefits for the receiving economy like higher liquidity, better economic development, higher growth of GDP and lesser pressure on exchange rate (Agyei et. al., 2022).…”

Section: Introductionmentioning

confidence: 99%

The Nexus of Terrorism, Electricity Load Shedding, Political Instability and FPI: An Empirical Evidence of Pakistan

Anwar

Sabir

María

2023

IJMRES

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The term foreign portfolio investment (FPI) refers buying the money market instruments, bonds or shares in an overseas country for a shorter time frame. The FPI inflows are critical cash flows for Pakistan due to present uncertain economic and political environment. Due to the unstable political environment, electricity load shedding and terrorism; the market risk has increased significantly, therefore, the overseas investors are hesitant to invest for a longer time frame currently, but the government can attract them through FPI. This research aimed to determine the association of terrorism, political instability and electricity load shedding with FPI from 1991 to 2021 through ARDL and ECM models. The findings of the ARDL and ECM Models have shown that short run and long run co-integration does exist between the variables. Moreover, electricity load shedding is affecting portfolio investment during short run as well as long run time frame, whereas, the variable of political instability is affecting portfolio investment in short run only. Furthermore, the variable of terrorism is not affecting portfolio investment in long run or short run.

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“…Thus, developing the venture capital market can serve as an alternative for strengthening access to funding in the region. Moreover, since the region is known for possessing weaker institutional structures (see, Mensah, Bokpin, & Boachie‐Yiadom, 2018; Agyei et al, 2022), strengthening economic institutions that support the growth of activities of venture capitalists, financial sector development and economic growth can be invaluable to these economies. Second, the venture capital market of these economies is largely underdeveloped (Abor, Agbloyor, & Issahaku, 2019).…”

Section: Introductionmentioning

confidence: 99%

Institutions and venture capital market development in sub‐Saharan Africa

Boateng,

Owusu Junior,

Gatsi

et al. 2023

J of Intl Development

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We investigate the critical interplay between economic institutions and political institutions and assess their influence on venture capital market development in sub‐Saharan Africa (SSA). To address endogeneity concern in our model specification, the two‐step system generalised method of moments was employed on a sample of 34 SSA countries from 2007 to 2018. The findings reveal that strengthening disaggregated measures of economic institutions, comprising legal system and property rights, size of government, sound money, regulations, and freedom to trade internationally spur venture capital market development in SSA. Finally, the evidence indicates that political institutions condition the influence of economic institutions on venture capital market development. The implications for policy are further discussed.

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Country-Level corporate governance and Foreign Portfolio Investments in Sub-Saharan Africa: The moderating role of institutional quality

Cited by 9 publications

References 64 publications

Bank capital and liquidity creation in Sub-Saharan Africa: the role of quality institutions

Bank capital and liquidity creation in Sub-Saharan Africa: the role of quality institutions

The Nexus of Terrorism, Electricity Load Shedding, Political Instability and FPI: An Empirical Evidence of Pakistan

Institutions and venture capital market development in sub‐Saharan Africa

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