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Differences in African Banking Systems: Causes and Consequences

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  • Mutarindwa, Samuel
  • Schäfer, Dorothea
  • Stephan, Andreas

Abstract

This paper links banking system development to the colonial and legal history of African countries. Based on a sample of 40 African countries from 2000 to 2018, our empirical findings show a significant dependence of current financial institutions on the inherited legal origin and the colonization type. Findings also reveal that current financial legal institutions are not major determinants of banking system development, and that institutional development and governance quality are more important. A high share of government spending relative to GDP also positively affects banking system development in African countries.

Suggested Citation

  • Mutarindwa, Samuel & Schäfer, Dorothea & Stephan, Andreas, 2021. "Differences in African Banking Systems: Causes and Consequences," GLO Discussion Paper Series 778, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:778
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    More about this item

    Keywords

    Legal origin; colonial history; financial institutions; banking system; correlated random effects model;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • K15 - Law and Economics - - Basic Areas of Law - - - Civil Law; Common Law
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

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