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Unveiling the Energy Saving Role of Banking Performance in Sub-Sahara Africa

Author

Listed:
  • Anthony Amoah
  • ‪Edmond Hagan
  • ‪Franklin Amuakwa-Mensah
  • Philip K. Adom
  • Rebecca A. Klege

Abstract

This article examines the effect of commercial bank performance on an indicator of energy efficiency (i.e. energy intensity) while controlling for the mediating effect of political institution. To achieve this goal, the study develops a theoretical model based on the neoclassical theory of the firm that links energy efficiency to bank sector development, and a unique bank-based data by Andrianova et al. (2015) for 43 Sub-Saharan African countries from 1998 to 2012. The principal component analysis is used to derive a composite bank-based development index from different bank balance sheet performance indicators- return on asset, asset quality, bank capitalization, managerial inefficiency and financial stability. The two-stage system generalized method of moment (Sys-GMM) technique was used. The results reveal that, both in the short- and long-run, improved banking performance fosters energy efficiency improvements in sub-Saharan Africa, but this is compromised by democracy (institutional quality). Thus, to achieve energy efficiency improvements, specific initiatives should be implemented to boost the development of the banking sector while also ensuring that democratic governance in the sub-region weans itself off things that impede the progress of the real sector. More ambitiously, creating a Green Bank may be necessary to stimulate energy efficiency investments in the sub-region.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Anthony Amoah & ‪Edmond Hagan & ‪Franklin Amuakwa-Mensah & Philip K. Adom & Rebecca A. Klege, 2018. "Unveiling the Energy Saving Role of Banking Performance in Sub-Sahara Africa," ERSA Working Paper Series 744, Economic Research Southern Africa.
    • Handle: RePEc:rza:ersawp:744
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    2. Hounyonou, Quentin Nouhesséwa, 2025. "African firms’ adaptation to Chinese shock under financial and electricity constraints," Energy Economics, Elsevier, vol. 150(C).
    3. Trinh, Hai Hong & Sharma, Gagan Deep & Tiwari, Aviral Kumar & Vo, Diem Thi Hong, 2022. "Examining the heterogeneity of financial development in the energy-environment nexus in the era of climate change: Novel evidence around the world," Energy Economics, Elsevier, vol. 116(C).
    4. Tajudeen, Ibrahim A., 2021. "The underlying drivers of economy-wide energy efficiency and asymmetric energy price responses," Energy Economics, Elsevier, vol. 98(C).
    5. Festus Fatai Adedoyin & Festus Victor Bekun & Kayode Kolawole Eluwole & Samuel Adams, 2022. "Modelling the Nexus between Financial Development, FDI, and CO 2 Emission: Does Institutional Quality Matter?," Energies, MDPI, vol. 15(20), pages 1-17, October.
    6. Aliya Zhakanova Isiksal, 2021. "The financial sector expansion effect on renewable electricity production: case of the BRICS countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(6), pages 9029-9051, June.
    7. Amuakwa-Mensah, Salome & Surry, Yves, 2022. "Association between rural electrification and agricultural output: Evidence from Sub-Saharan Africa," World Development Perspectives, Elsevier, vol. 25(C).
    8. Hsieh, Meng-Fen & Lee, Chien-Chiang & Lin, Yi-Ching, 2022. "New evidence on liquidity creation and bank capital: The roles of liquidity and political risk," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 778-794.
    9. Adom, Philip Kofi, 2024. "Regulatory impact of informality on gasoline consumption efficiency in Africa: A proposed two-part complementary hypothesis test," Energy Economics, Elsevier, vol. 140(C).
    10. Abdul Jalil & Abdul Rauf, 2024. "Financial development and the environment: evidence from heterogenous panel methods," International Economics and Economic Policy, Springer, vol. 21(4), pages 787-816, October.
    11. Jasman Tuyon & Okey Peter Onyia & Aidi Ahmi & Chia-Hsing Huang, 2023. "Sustainable financial services: reflection and future perspectives," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 28(4), pages 664-690, December.
    12. Dzator, Janet & Acheampong, Alex O. & Appiah-Otoo, Isaac & Dzator, Michael, 2023. "Leveraging digital technology for development: Does ICT contribute to poverty reduction?," Telecommunications Policy, Elsevier, vol. 47(4).
    13. Philip Kofi Adom & Franklin Amuakwa-Mensah & Salome Amuakwa-Mensah, 2020. "Degree of financialization and energy efficiency in Sub-Saharan Africa: do institutions matter?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-22, December.
    14. Nelson Amowine & Zhiqiang Ma & Mingxing Li & Zhixiang Zhou & Benjamin Azembila Asunka & James Amowine, 2019. "Energy Efficiency Improvement Assessment in Africa: An Integrated Dynamic DEA Approach," Energies, MDPI, vol. 12(20), pages 1-17, October.
    15. Lee, Chien-Chiang & Wang, Chih-Wei & Ho, Shan-Ju & Wu, Ting-Pin, 2025. "Corrigendum to “The impact of natural disaster on energy consumption: International evidence” [Energy Economics Volume 97, May 2021, 105021]," Energy Economics, Elsevier, vol. 149(C).
    16. Sun, Huaping & Edziah, Bless Kofi & Sun, Chuanwang & Kporsu, Anthony Kwaku, 2022. "Institutional quality and its spatial spillover effects on energy efficiency," Socio-Economic Planning Sciences, Elsevier, vol. 83(C).
    17. Philip Kofi Adom, 2018. "The Long‐run Effects of Political Regimes and Economic Openness on Energy Intensity," African Development Review, African Development Bank, vol. 30(4), pages 399-409, December.
    18. Amuakwa-Mensah, Franklin & Näsström, Elin, 2022. "Role of banking sector performance in renewable energy consumption," Applied Energy, Elsevier, vol. 306(PB).
    19. Doytch, Nadia & Elheddad, Mohamed & Hammoudeh, Shawkat, 2023. "The financial Kuznets curve of energy consumption: Global evidence," Energy Policy, Elsevier, vol. 177(C).
    20. Aményon Akakpo & Shi Xinjie & Bingyu Huangfu, 2025. "Influence of the rural electrification program on food security in Togo," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 17(2), pages 363-386, April.
    21. Philip Kofi Adom, 2021. "Financial depth and electricity consumption in Africa: Does education matter?," Empirical Economics, Springer, vol. 61(4), pages 1985-2039, October.

    More about this item

    Keywords

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    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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