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Banking in Sub-Saharan Africa; What Went Wrong?

Author

Listed:
  • Françoise Le Gall
  • Roland Daumont
  • François Leroux

Abstract

The purpose of this paper is to study the origins of banking crises in sub-Saharan Africa, drawing upon the experience of ten countries during the period 1985-95. It examines, in particular, which factors were the most important sources of these crises. The conclusions underscore that the banking crises examined did not represent an entirely special case-a number of factors identified in the general literature, including macroeconomic shocks, were highly relevant-but note that several of their features were nonetheless specific to this part of the world. These banking crises were the very prototype of endemic crises associated with heavy government intervention in the banking system. In this regard, the paper analyzes the complex role of the government in banking in sub-Saharan Africa, the many channels through which governments intervened, and the economic and institutional environment in which the banks operated.

Suggested Citation

  • Françoise Le Gall & Roland Daumont & François Leroux, 2004. "Banking in Sub-Saharan Africa; What Went Wrong?," IMF Working Papers 04/55, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:04/55
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    Citations

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    Cited by:

    1. Janvier D. Nkurunziza, 2005. "Reputation and Credit without Collateral in Africa`s Formal Banking," Economics Series Working Papers WPS/2005-02, University of Oxford, Department of Economics.
    2. Vogel, Ursula & Winkler, Adalbert, 2010. "Foreign banks and financial stability in emerging markets: Evidence from the global financial crisis," Frankfurt School - Working Paper Series 149, Frankfurt School of Finance and Management.
    3. Svetlana Andrianova & Badi H. Baltagi & Panicos Demetriades & David Fielding, 2017. "Ethnic Fractionalization, Governance and Loan Defaults in Africa," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(4), pages 435-462, August.
    4. David Hauner & Shanaka Peiris, 2008. "Banking efficiency and competition in low income countries: the case of Uganda," Applied Economics, Taylor & Francis Journals, vol. 40(21), pages 2703-2720.
    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. Caggiano, Giovanni & Calice, Pietro & Leonida, Leone, 2014. "Early warning systems and systemic banking crises in low income countries: A multinomial logit approach," Journal of Banking & Finance, Elsevier, vol. 47(C), pages 258-269.
    7. Patrick Honohan & Thorsten Beck, 2007. "Making Finance Work for Africa," World Bank Publications, The World Bank, number 6626.
    8. Thorsten Beck & Samuel Munzele Maimbo, 2013. "Financial Sector Development in Africa : Opportunities and Challenges," World Bank Publications, The World Bank, number 11881.
    9. David Hauner & Shanaka J Peiris, 2005. "Bank Efficiency and Competition in Low-Income Countries; The Case of Uganda," IMF Working Papers 05/240, International Monetary Fund.

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