Financial Inclusion and Bank Competition in Sub-Saharan Africa

Mengistu, Azanaw; Perez-Saiz, Hector

doi:10.5089/9781484386163.001

Cited by 17 publications

(15 citation statements)

References 29 publications

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“…Several emerging market and developing economies in the sample, such as Colombia, Mauritius, and Morocco, have achieved a sustained increase in the competition intensity index over the last decade equivalent to an increase from the median level for sub-Saharan African countries to the top quartile of the world distribution.24 These results of sub-Saharan Africa should be interpreted with caution given the limited sample size for the region, which covers a period with few observed changes in competition indicators.25 Competition could also impact economic growth through some other channels. For example, studies indicate that inadequate access to finance has been a chronic impediment to growth in sub-Saharan Africa (IMF 2018), while available evidence suggests that competition in the banking sector is strongly associated with financial inclusion and access(Mengistu and Perez-Saiz 2018).©International Monetary Fund. Not for Redistribution…”

mentioning

confidence: 99%

Competition, Competitiveness and Growth in Sub-Saharan Africa

Cherif¹,

Dhungana²,

Fang³

et al. 2020

IMF Working Papers

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Does greater product market competition improve external competitiveness and growth? This paper examines this question by using country-and firm-level data for a sample of 39 sub-Saharan African countries over 2000–17, as well as other emerging market economies and developing countries, and finds that an improvement in domestic competition is associated with a signficant increase in real GDP per capita growth rate, achieved mainly through an improvement in export competitiveness and productivity growth. Price levels, including of essential items, are also generally lowered with an increase in competition. Moreover, at the firm-level, evidence shows that greater competition—proxied through a decline in corporate market power—is associated with an increase in firm’s investment and the labor’s share in output. These effects are more pronounced in the manufacturing sector and among domestic firms compared to foreign firms.

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mentioning

confidence: 99%

Competition, Competitiveness and Growth in Sub-Saharan Africa

Cherif¹,

Dhungana²,

Fang³

et al. 2020

IMF Working Papers

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“…Market share and bank size will increase resulting in increased economic growth. This is not unexpected as bank competition roles in finance and growth in terms of stimulating access to finance should ultimately indirectly lead to economic growth (Mengistu and Saiz, 2018) besides competition stability and competition efficiency nexus in literature (Moyo, 2018).…”

Section: Interpretation and Discussion Of Sem Resultsmentioning

confidence: 99%

Financial Inclusion, Mobile Phone Diffusion, and Economic Growth; Evidence From Africa

Chinoda

Akande

2019

IJEFI

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Whether finance enhances growth has continued to be a major debate among academics in the bids to drive economic growth and development. Hitherto, empirical studies focusing on Africa in addressing these issues for the expected regional sustainable growth are rare. This study applied structural equation modelling to simultaneously analyse mobile phones diffusion, financial inclusion, and economic growth in a panel of 32 African countries over the period from 2004 to 2016. The results provided evidence that financial inclusion affects economic growth via mobile phones. This study has implication for managing the deployment of mobile phones by for finance and growth relevance in Africa.

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“…Moreover, competition causes banks to take risks to increase returns by providing loans to sub-prime borrowers (Berger, Klapper & Turk-Ariss 2009). Studies by Mengistu and Saiz (2018), Owen and Pereira (2018) and Marin and Schwabe (2019) concluded a positive relationship between bank competition and financial inclusion in line with the market-structure hypothesis. The information hypothesis postulates that bank competition negatively affects financial inclusion.…”

Section: Bank Competition and Financial Inclusionmentioning

confidence: 96%

“…These methods include ordinary least squares (Evans 2015;Okoye, Erin & Modebe 2017;Otiwu et al 2018), Granger causality test with autoregressive distribution lag (ARDL) (Bigirimana & Hongyi 2018;Lenka & Sharma 2017;Sethi & Sethy 2018), generalised method of moments (Andrianaivo & Kpodar 2012), panel vector autoregression (Kim, Yu & Hassan 2018;Sharma 2016). Concomitantly, studies by Mengistu and Saiz (2018), Owen and Pereira (2018) and Marin and Schwabe (2019) concluded a positive relationship between bank competition and financial inclusion in line with the market-structure hypothesis, whilst Love et al (2014) and Azer et al (2019) maintained an inverse relationship between the two variables in support of the information-based hypothesis.…”

Section: Introductionmentioning

confidence: 99%

Financial inclusion, bank competition and economic growth in Africa

Chinoda

Mashamba

2021

Journal of Economic and Financial Sciences

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Orientation: The relevance of bank competition and economic growth for boosting financial inclusion is attracting unprecedented attention from academics and policymakers, mainly because of several persisting issues which, if addressed, can enhance the functionality of governments, businesses, individuals and the economy.Research purpose: The study aims to examine the interplay between financial inclusion, bank competition and economic growth in Africa.Motivation for the study: Previous literature focuses mainly on the nexus between financial inclusion and bank competition, financial inclusion and economic growth and bank competition and economic growth producing diverse results, with a dearth of literature on the trivariate link between the three variables.Research approach/design and method: This study employed the pooled mean group estimation-based panel autoregression distribution lag approach from 2004 to 2018. A panel data analysis for 20 African countries was used.Main findings: The study found a significant positive relationship between financial inclusion and economic growth in the long run. However, in the short run, economic growth significantly reduces financial inclusion. We also found that in the long-run bank competition reduces financial inclusion in line with the information hypothesis. However, in the short run the effect is significantly positive, consistent with the market power hypothesis.Practical/managerial implications: Policymakers and development agencies should implement measures that reckon incentives that can accelerate bank competition to bring on-board the unbanked. They should also take note of financial inclusion measurement in addressing financial inclusion challenges. Moreover, they should minimise barriers to financial inclusion to enhance bank competition and stability.Contribution/value-add: The study managed to discover how bank competition and economic growth influences financial inclusion.

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Financial Inclusion and Bank Competition in Sub-Saharan Africa

Abstract: Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Cited by 17 publications

References 29 publications

Competition, Competitiveness and Growth in Sub-Saharan Africa

Competition, Competitiveness and Growth in Sub-Saharan Africa

Financial Inclusion, Mobile Phone Diffusion, and Economic Growth; Evidence From Africa

Financial inclusion, bank competition and economic growth in Africa

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