The Impact of Capital Structure on Banks’ Profitability in Africa

This paper investigates the impact of capital structure on the profitability of banks in Africa. Using dynamic panel regression robust analysis and data from 37 countries in SSA, the study employed the Debt Ratio (DR) as a measure of capital structure; whereas banks’ profitability was measured using Risk Adjusted Return on Asset (RAROA), Risk Adjusted Return on Equity (RAROE) and Net Interest Margin (NIM). The findings suggest that, banks’ capital structure is a driver of profitability. Other variables that significantly influence banks’ profitability are size, tangible asset, growth, taxes and interest rate

Harnessing the synergies of independent central banks and human capital for enhanced financial sector development in Africa

Using panel data from 2004 to 2012, we employ a two-step system GMM estimation technique, with robust standard errors, collapsed instruments and illus-trate marginal effects of central bank independence on financial development in Africa. We also examine the moderating roles of human capital, proxied by literacy rates on the CBI-financial development nexus. We find that, in countries with higher literacy rates/human capital, the positive impact of dejure CBI on financial development is enhanced. Higher literacy rates however, worsen the negative impact of de facto CBO on financial devel-opment. Independent central banks can be made more effective in achieving financial development through governments improving literacy rates. The study is the first to empirically examine the impact of central bank independence on financial development using both dejure and de facto CBI measures and literacy rates in explaining this relationshi

The push for financial inclusion in Africa:Should central banks be wary of political institutional quality and literacy rates?

Motivated by the literature on reform complementarities and their importance for the effectiveness of central bank independence (CBI) reforms—particularly for African countries—where CBI has empirically not been found to have a significant impact on financial development, we explore the extent to which differences in literacy levels and political institutions could determine the extent and impact of CBI on financial inclusion. Using panel data from 2004 to 2014, we find that, while CBI does not promote financial inclusion in Africa, financial literacy and political institutions do; even to the extent of enabling CBI's impact on financial inclusion. The results are robust to different measures of political institutions from Freedom House and Polity IV Database and present implications for the role governments could play in shepherding central banks in Africa in the midst of Africa's developmental challenges and the global crises

Asian Economic and Financial Review, 2015, 5(4):624-640 DETERMINANTS OF CAPITAL STRUCTURE OF BANKS: EVIDENCE FROM SUB-SAHARA AFRICA Asian Economic and Financial Review Asian Economic and Financial Review, 2015, 5(4):624-640

ABSTRACT This study seeks to examine the determinants of capital structure of banks in Sub-Sahara Africa. Keywords: Capital structure, Return on asset, Total debt ratio, Long term debt ratio, Short term debt ratio, Asset tangibility. This study has employed the use of panel data techniques to analyze the determinants of capital structure of banks in sub-Sahara Africa The dependent variables used in the study were short-term debt ratio (STDR), long-term debt ratio (LTDR) and the total debt ratio (TDAR Contribution/ Originality Most empirical studies that examine the determinants of capital structure have been done for developed or specific country and there is little evidence in Sub-Sahara Africa. This study 625 variables as determinants of capital structure of banks. This study is one of very few studies which have investigated the determinants of capital structure of banks in Sub-Sahara Africa. This study contributes by determining the significant variables that determines banks capital structure in Africa

Asian Economic and Financial Review, 2015, 5(4):624-640 DETERMINANTS OF CAPITAL STRUCTURE OF BANKS: EVIDENCE FROM SUB-SAHARA AFRICA

ABSTRACT This study seeks to examine the determinants of capital structure of banks in Sub-Sahara Africa. Keywords: Capital structure, Return on asset, Total debt ratio, Long term debt ratio, Short term debt ratio, Asset tangibility. This study has employed the use of panel data techniques to analyze the determinants of capital structure of banks in sub-Sahara Africa The dependent variables used in the study were short-term debt ratio (STDR), long-term debt ratio (LTDR) and the total debt ratio (TDAR Contribution/ Originality Most empirical studies that examine the determinants of capital structure have been done for developed or specific country and there is little evidence in Sub-Sahara Africa. This study have investigated the determinants of capital structure of banks in Sub-Sahara Africa. This study contributes by determining the significant variables that determines banks capital structure in Africa

A vector autoregression (VAR) analysis of corruption, economic growth, and foreign direct investment in Ghana

The paper investigated the dynamic and causal relationship among corruption, foreign direct investment, and economic growth simultaneously, a largely overlooked area in empirical studies, using a dataset from Ghana. It is among the few studies that explore the confluence of these variables and therefore contributes to understanding the contextual realities of the impact of FDI inflow, an often-prioritised policy choice, on widely used measures of social coherence and welfare. The study employed a vector autoregressive (VAR) estimation approach to empirically explore the relationships among corruption, foreign direct investment, and economic growth. The findings suggest that there is a reverse causality among corruption, foreign direct investment, and economic growth. This indicates that these variables are complementary rather than contradictory. These findings imply that central government and policymakers should not pursue any of these variables as a policy goal, but rather treat them as complements when modelling or formulating economic policies. This means that policies aimed at promoting foreign direct investment will not jeopardize or compromise the control of corruption and economic growth and vice versa

Financial Inclusion and Monetary Policy: A Review of Recent Studies

This study attempts to review the extant literature on financial inclusion, financial development innovation and monetary policy. It surveys literature between 2007 and 2015 and identifies key themes in this field of study, methodologies adopted, geographical distribution of the studies and synthesises these to identify relevant gaps and direction for future research. The study makes very intetersting finding. Common areas of study can be categorised as determinants, effects and evaluation of these concepts. Areas for discussions have focused on financial inclusion and its implications for monetary policy and financial stability. The linkage between financial inclusion and monetary policy has been studied in few instances and through models that estimate a direct relationship. Studies that estimate models which examine the mediating role of financial development and innovation on the  impact of financial inclusion on monetary policy are yet to be done. Researchers have mostly modeled that, growth in financial  innovation, financial development and financial inclusion on their own, do individually enhance growth in total factor productivity. These studies however do not explore the possible mediating effects of these factors on another in maximising their effects.  Innovation can stir up financial inclusion through the availability of various products that either transfer or mitigate the risk of  providing financial services to the unbanked. However, while innovation directly spurs financial inclusion effectively, how this  relationship is affected at different levels of financial development is yet to be established. Literature has documented various ways in which increased financial inclusion could be beneficial for financial stability, but it is yet to be explored how sensitive this effect could be at different levels of financial depth. These are the gaps the study identifies and recommends to be filled by furture research. The study futher recommends that empirical examination of the effect of financial development on the relationship between financial innovation and financial inclusion be done in addition to cross-country and regional studies on the impact of financial inclusion on monetary policy using panel data.Keywords: Financial Inclusion, Financial Development, Financial Innovation, Monetary Policy, Financial Stabilit

Tax efforts and tax evasion–economic development Nexus. Does institutional quality matter?

As a result of the failure to meet tax collection targets, policymakers, economists, and financiers have focused their attention in recent years on how a country's tax effort has been employed to combat tax evasion and maximise tax collections for economic growth. The study looked at the nexus between tax efforts, tax evasion, and economic development, as well as the effect of institutional quality on moderating the nexus in Ghana. The maximum likelihood (ML) estimation and structural equation modelling (SEM) techniques were used in the study to analyse a sample of quartered data from 1996 to 2020. Testing the hypotheses reveals that both tax efforts and tax evasion have negative effects on the economic freedom of the world index (EFWI) but positive effects on urbanisation. A test of the third hypothesis shows that institutional quality moderates tax evasion in Ghana in order to influence economic development. The findings imply that the idea that tax evasion is bad for an economy or that tax efforts drive domestic revenue mobilisation is based mainly on prima facie evidence. Tax efforts such as tax amnesty may appear to compliant taxpayers as an incentive for tax evaders, which could affect their compliance. The adoption of the tax efforts index measure to examine its econometric impact on economic development is one of the pioneering attempts in the field. The study recommends well-thought-out strategies to ensure that tax efforts achieve their intended goals