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Cross-Border Banking and Banking Crisis in Africa

In: The Economics of Banking and Finance in Africa

Author

Listed:
  • Charles Komla Delali Adjasi

    (University of Stellenbosch Business School)

  • Isaac Ofoeda

    (University for Professional Studies)

  • Khadijah Iddrisu

    (SDD University of Integrated Business and Development)

  • Foluso Akinsola

    (University of Lagos)

Abstract

Cross-border banking has become an increasingly important feature of African financial systems. However, the impact of cross-border banking on the banking stability and probability of a banking crisis has remained a controversial issue in the literature. For the most part, the literature contends that cross-border banking promotes banking sector stability. This study however seeks to establish the impact of cross-border banking on the probability of a banking crisis in Africa. The study employed data from 52 African countries from 1970 to 2017. We employed the logit regression to test the hypothesis of the study. Again, we estimate the marginal effects of our model. The study provides evidence that cross-border banking, that is, foreign bank presence and participation in the domestic banking sector is more likely to result in a banking crisis in Africa. However, the probability of a banking crisis in Africa as a result of cross-border is not that significant.

Suggested Citation

  • Charles Komla Delali Adjasi & Isaac Ofoeda & Khadijah Iddrisu & Foluso Akinsola, 2022. "Cross-Border Banking and Banking Crisis 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 491-514, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-031-04162-4_15
    DOI: 10.1007/978-3-031-04162-4_15
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