Financial Inclusion and Bank Competition in Sub-Saharan Africa

Azanaw Mengistu and Hector Perez-Saiz

No 2018/256, IMF Working Papers from International Monetary Fund

Abstract: In this paper we study how competition and financial soundness affect financial inclusion in Sub-Saharan Africa (SSA). We use detailed individual-level survey data, combined with key country-level indicators of bank competition and financial soundness, to study the effect on the adoption of several financial products (bank accounts, credit and debit cards, and bank loans). We find that more competition tends to increase the probability of access to these financial products. On the contrary, we do not find strong evidence of the effect of bank-balance sheet variables (i.e. capital adequacy or liquidity) on borrowing by individuals. Our results may help policy makers design regulations that could improve financial inclusion, which could potentially impact economic growth and long-term economic development.

Keywords: WP; bank balance-sheet variable; bank balance-sheet weakness; bank competition; liquid asset ratio; Lerner index; money bank; Financial inclusion; competition; financial soundness; accounts; debit cards; bank lending-deposit; Credit; Fiscal accounting and reporting; Capital adequacy requirements; Global; Sub-Saharan Africa (search for similar items in EconPapers)
Pages: 29
Date: 2018-12-07
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Citations: View citations in EconPapers (8)

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