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African Banking Sector Development: The Roles of Remittances and Monetary Policy

Author

Listed:
  • Joshua Y. Abor
  • Mohammed Amidu
  • Emmanuel Sarpong-Kumankoma
  • Haruna Issahaku

    (University of Ghana Business School)

Abstract

The paper investigates the implications of international migrant remittances and monetary policy for banking sector development using a sample of 35 African countries over an eighteen-year period, 1996-2013. We provide additional insight by examining the complex interlocking of three key variables that are important for regulators: remittances, monetary policy and banking sector development. The results show that remittances promote banking sector depth, outreach and stability. We also find evidence to suggest that in middle- and high-income countries, an increase in remittance inflows and contraction of monetary policy are associated with a lowering of banking sector efficiency.

Suggested Citation

  • Joshua Y. Abor & Mohammed Amidu & Emmanuel Sarpong-Kumankoma & Haruna Issahaku, 2021. "African Banking Sector Development: The Roles of Remittances and Monetary Policy," The African Finance Journal, Africagrowth Institute, vol. 23(1), pages 20-40.
    • Handle: RePEc:afj:journl:v:23:y:2021:i:1:p:20-40
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    File URL: https://journals.co.za/doi/abs/10.10520/ejc-finj_v23_n1_a2
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    More about this item

    Keywords

    Banking; remittances; monetary policy; developing countries;
    All these keywords.

    JEL classification:

    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania

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