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Bank Runs and Banking Policies: Lessons for African Policy Makers

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  • Edward J. Kane
  • Tara Rice

Abstract

This paper documents and explains the near‐permanent banking stress African countries have experienced during the last 20 years. The central hypothesis is that banking stress comes predominantly from unbooked losses and that the level of unbooked losses a banking system can accumulate depends on its information environment and the effectiveness of government efforts to supervise and guarantee bank solvency. African depositors face high costs for mitigating the loss exposures that banks and regulators impose on them, and African regulators have not been made accountable for these costs. We present evidence that over 1980–99 the average length of time an African banking system spent in crisis increased with the level of government corruption.

Suggested Citation

  • Edward J. Kane & Tara Rice, 2001. "Bank Runs and Banking Policies: Lessons for African Policy Makers," Journal of African Economies, Centre for the Study of African Economies, vol. 10(suppl_1), pages 36-71.
    • Handle: RePEc:oup:jafrec:v:10:y:2001:i:suppl_1:p:36-71.
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    File URL: http://hdl.handle.net/10.1093/jae/10.Suppl1.36
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    Cited by:

    1. Tony Addison & Alemayehu Geda & Philippe Le Billon & S Mansoob Murshed, 2005. "Reconstructing and Reforming the Financial System in Conflict and 'Post-Conflict' Economies," Journal of Development Studies, Taylor & Francis Journals, vol. 41(4), pages 703-718.
    2. Andersson, Fredrik NG, 2016. "A Blessing in Disguise? Banking Crises and Institutional Change," World Development, Elsevier, vol. 83(C), pages 135-147.
    3. Thomas Barnebeck Andersen & Finn Tarp, 2003. "Financial liberalization, financial development and economic growth in LDCs," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(2), pages 189-209.
    4. Saubhik Deb, 2006. "Output Growth, Capital Flow Reversals and Sudden stop Crises," Departmental Working Papers 200606, Rutgers University, Department of Economics.
    5. Fofack, Hippolyte L., 2005. "Nonperforming loans in Sub-Saharan Africa : causal analysis and macroeconomic implications," Policy Research Working Paper Series 3769, The World Bank.
    6. Paul NINGAYE & Virginia Takoutio FEUDJIO, 2014. "Bankruptcy, financial liberalization, and efficiency of commercial banks in Cameroon," EuroEconomica, Danubius University of Galati, issue 2(33), pages 119-134, November.
    7. Aykut Kibritcioglu, 2002. "Monitoring Banking Sector Fragility," Macroeconomics 0206004, University Library of Munich, Germany, revised 17 Mar 2006.
    8. Khemraj, Tarron & Pasha, Sukrishnalall, 2025. "Dynamic implications of fiscal policy on NPLs: theoretical analysis and panel-regression empirics," MPRA Paper 126458, University Library of Munich, Germany.
    9. Kibritcioglu, Aykut, 2002. "Excessive Risk-Taking, Banking Sector Fragility, and Banking Crises," Working Papers 02-0114, University of Illinois at Urbana-Champaign, College of Business.

    More about this item

    JEL classification:

    • F3 - International Economics - - International Finance
    • G2 - Financial Economics - - Financial Institutions and Services

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