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How Does Banking Concentration Affect Financial Inclusion in the Southern African Region?

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Listed:
  • Munacinga Simatele

    (Department of Economics, East London Campus, University of Fort Hare, 50 Church Street, East London 5201, South Africa)

  • Segun Thompson Bolarinwa

    (Department of Economics, East London Campus, University of Fort Hare, 50 Church Street, East London 5201, South Africa)

Abstract

Financial inclusion is an important enabler of economic development and aligns with several United Nations Sustainable Development Goals. In most sub-Saharan African countries, financial inclusion efforts take place in the presence of concentrated and bank-dominated systems. This study investigates the relationship between banking concentration and financial inclusion, focusing on account ownership, savings, and loans from 2010 to 2021. This paper employs dynamic panel threshold modelling to identify concentration thresholds that influence the direction of the relationship. A U-shaped relationship is identified, indicating relatively high levels of bank concentration that can benefit bank account ownership and loans. Thresholds for savings are relatively low. The effect of bank concentration on savings and loans is tempered by mobile phone penetration. Strong property rights and low levels of corruption also moderate this relationship, underscoring the importance of institutional frameworks in fostering trust and reducing informational asymmetries.

Suggested Citation

  • Munacinga Simatele & Segun Thompson Bolarinwa, 2025. "How Does Banking Concentration Affect Financial Inclusion in the Southern African Region?," Economies, MDPI, vol. 13(2), pages 1-15, January.
    • Handle: RePEc:gam:jecomi:v:13:y:2025:i:2:p:32-:d:1580811
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    References listed on IDEAS

    as
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    2. Désiré Avom & Chrysost Bangake & Hermann Ndoya, 2022. "Does bank concentration stem from financial inclusion in Africa?," Applied Economics, Taylor & Francis Journals, vol. 54(28), pages 3261-3278, June.
    3. Mitchell A. Petersen & Raghuram G. Rajan, 1995. "The Effect of Credit Market Competition on Lending Relationships," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 407-443.
    4. Thorsten Beck & Lemma Senbet & Witness Simbanegavi, 2015. "Financial Inclusion and Innovation in Africa: An Overview," Journal of African Economies, Centre for the Study of African Economies, vol. 24(suppl_1), pages 3-11.
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