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Bank Pricing Behaviour, Monetary Policy and Inclusive Finance in Africa

In: The Economics of Banking and Finance in Africa

Author

Listed:
  • Mohammed Amidu

    (University of Ghana Business School)

  • Abdul Ganiyu Iddrisu

    (University of Aberdeen)

  • Alhassan Andani

    (LVS Africa)

  • Benjamin Agyeman

    (University of Ghana Business School)

Abstract

This study examines financial inclusion in Sub-Saharan Africa, with focus on the role of monetary policy and banks’ pricing behaviour. Using a sample of 330 banks operating in 29 Sub-Saharan African countries, we test the following hypotheses. First, loan price increases when monetary policy is contracted and bank prices reduce when general price level is stable (effective monetary policy). Building on these results and using various specifications of monetary policy and bank pricing strategy, the second test suggests that, high bank pricing in the light of contractionary monetary policy tend to increase financial inclusion, and that high bank pricing reduces financial inclusion when monetary policy is effective. These findings are relevant for policy making regarding improving financial inclusion in SSA.

Suggested Citation

  • Mohammed Amidu & Abdul Ganiyu Iddrisu & Alhassan Andani & Benjamin Agyeman, 2022. "Bank Pricing Behaviour, Monetary Policy and Inclusive Finance in Africa," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Joshua Yindenaba Abor & Charles Komla Delali Adjasi (ed.), The Economics of Banking and Finance in Africa, chapter 0, pages 335-369, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-031-04162-4_10
    DOI: 10.1007/978-3-031-04162-4_10
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