Modelling the financial intermediation function of banks and economic growth in sub-Saharan Africa
Purpose – The purpose of this study is to investigate the effect of financial intermediation functions of banks on economic growth in sub-Saharan Africa. Design/methodology/approach – The study employs data from 11 sub-Saharan African countries over the period 1970–2016. Using broad money supply, ba...
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2021-09-01
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| Series: | Journal of Money and Business |
| Subjects: | |
| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/JMB-04-2021-0005/full/pdf |
| _version_ | 1797786141978525696 |
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| author | Ibrahim Nandom Yakubu Iliasu Abdallah |
| author_facet | Ibrahim Nandom Yakubu Iliasu Abdallah |
| author_sort | Ibrahim Nandom Yakubu |
| collection | DOAJ |
| description | Purpose – The purpose of this study is to investigate the effect of financial intermediation functions of banks on economic growth in sub-Saharan Africa. Design/methodology/approach – The study employs data from 11 sub-Saharan African countries over the period 1970–2016. Using broad money supply, bank credit to the private sector and bank deposits as financial intermediation measures, the authors apply the random effects (RE) technique based on the recommendation of the Breusch–Pagan test. Findings – The results show that except for bank deposits, broad money supply and bank credit to the private sector significantly influence economic growth. While broad money has a negative relationship with growth, bank credit to the private sector and bank deposits are positively correlated with economic growth. Originality/value – The relationship between financial intermediation and economic growth remains unsettled, as results vary across countries. Besides, in developing countries' perspective, extant studies are largely focused on individual countries to investigate the financial intermediation-growth nexus. In this study, the authors take a different direction by employing a panel approach and thus adding to the few cross-country studies on the subject matter. Also, unlike other studies that have focused on a single indicator of financial intermediation, this study uses three indicators of financial intermediation which broadly reflect the intermediation functions of banks. |
| first_indexed | 2024-03-13T01:03:46Z |
| format | Article |
| id | doaj.art-3c159289a0af4862a0e2ad55a140e121 |
| institution | Directory Open Access Journal |
| issn | 2634-2596 2634-260X |
| language | English |
| last_indexed | 2024-03-13T01:03:46Z |
| publishDate | 2021-09-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | Journal of Money and Business |
| spelling | doaj.art-3c159289a0af4862a0e2ad55a140e1212023-07-06T07:52:27ZengEmerald PublishingJournal of Money and Business2634-25962634-260X2021-09-01111710.1108/JMB-04-2021-0005Modelling the financial intermediation function of banks and economic growth in sub-Saharan AfricaIbrahim Nandom Yakubu0Iliasu Abdallah1Department of Banking and Finance, Ankara Yildirim Beyazit University, Ankara, TurkeyDepartment of Islamic Economics and Finance, Marmara University, Istanbul, TurkeyPurpose – The purpose of this study is to investigate the effect of financial intermediation functions of banks on economic growth in sub-Saharan Africa. Design/methodology/approach – The study employs data from 11 sub-Saharan African countries over the period 1970–2016. Using broad money supply, bank credit to the private sector and bank deposits as financial intermediation measures, the authors apply the random effects (RE) technique based on the recommendation of the Breusch–Pagan test. Findings – The results show that except for bank deposits, broad money supply and bank credit to the private sector significantly influence economic growth. While broad money has a negative relationship with growth, bank credit to the private sector and bank deposits are positively correlated with economic growth. Originality/value – The relationship between financial intermediation and economic growth remains unsettled, as results vary across countries. Besides, in developing countries' perspective, extant studies are largely focused on individual countries to investigate the financial intermediation-growth nexus. In this study, the authors take a different direction by employing a panel approach and thus adding to the few cross-country studies on the subject matter. Also, unlike other studies that have focused on a single indicator of financial intermediation, this study uses three indicators of financial intermediation which broadly reflect the intermediation functions of banks.https://www.emerald.com/insight/content/doi/10.1108/JMB-04-2021-0005/full/pdfFinancial intermediationEconomic growthSub-Saharan AfricaRandom effects |
| spellingShingle | Ibrahim Nandom Yakubu Iliasu Abdallah Modelling the financial intermediation function of banks and economic growth in sub-Saharan Africa Journal of Money and Business Financial intermediation Economic growth Sub-Saharan Africa Random effects |
| title | Modelling the financial intermediation function of banks and economic growth in sub-Saharan Africa |
| title_full | Modelling the financial intermediation function of banks and economic growth in sub-Saharan Africa |
| title_fullStr | Modelling the financial intermediation function of banks and economic growth in sub-Saharan Africa |
| title_full_unstemmed | Modelling the financial intermediation function of banks and economic growth in sub-Saharan Africa |
| title_short | Modelling the financial intermediation function of banks and economic growth in sub-Saharan Africa |
| title_sort | modelling the financial intermediation function of banks and economic growth in sub saharan africa |
| topic | Financial intermediation Economic growth Sub-Saharan Africa Random effects |
| url | https://www.emerald.com/insight/content/doi/10.1108/JMB-04-2021-0005/full/pdf |
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