IDEAS home Printed from https://ideas.repec.org/a/rbs/ijbrss/v11y2022i10p119-139.html
   My bibliography  Save this article

The impact of African agriculture production on bank stability through bank risk and profit

Author

Listed:
  • Jean-Petit Sinamenye

    (School of Management, Huazhong University of Science and Technology, Wuhan 430074, China.)

  • Changjun Zheng

    (School of Management, Huazhong University of Science and Technology, Wuhan 430074, China.)

Abstract

The African farming sector suffers from insufficient finance. Climate changes and socio-political issues hold down the required production level while food on the continent is still inadequate, with more vulnerable people on the one side. On the other side, credit institutions need reasons and guarantees to raise their risk-taking level (financial benefits). Then, this study tries to conciliate those two sides with new shreds of evidence by demonstrating the short and long-run effects of agricultural production on bank sustainability in 40 Sub-Saharan African countries. The study used different agro-production factors (Food and Cereal production factors), bank stability proxies (Liquidity Ratio, NPLs, LLRs), and bank profitability proxies (ROA and ROE). The GMM, DFE, and FMOLS models were used for short (with the 2010-2019 dataset) and long-run analysis (with the 1970-2018 dataset). The results demonstrated that agricultural production increases bank stability and profitability but reduces bank risks. The study concludes that farming finance increases agro-production and stabilizes banks (win-win). Governments, via central banks, should encourage commercial banks to increase bank risk-taking levels to sustain their banking system, increase farming production, and improve food security. Key Words:Agriculture, Production, Bank Stability, Risk, Profitability; SSA.

Suggested Citation

  • Jean-Petit Sinamenye & Changjun Zheng, 2022. "The impact of African agriculture production on bank stability through bank risk and profit," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(10), pages 119-139, December.
  • Handle: RePEc:rbs:ijbrss:v:11:y:2022:i:10:p:119-139
    DOI: 10.20525/ijrbs.v11i10.2245
    as

    Download full text from publisher

    File URL: https://ssbfnet.com/ojs/index.php/ijrbs/article/view/2245/1607
    Download Restriction: no

    File URL: https://doi.org/10.20525/ijrbs.v11i10.2245
    Download Restriction: no

    File URL: https://libkey.io/10.20525/ijrbs.v11i10.2245?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. de la Croix, David & Gobbi, Paula E., 2022. "Population homeostasis in sub-Saharan Africa," Economics & Human Biology, Elsevier, vol. 45(C).
    2. Thomson,Henry, 2019. "Food and Power," Cambridge Books, Cambridge University Press, number 9781108476812.
    3. Esther Gehrke, 2019. "An Employment Guarantee as Risk Insurance? Assessing the Effects of the NREGS on Agricultural Production Decisions," The World Bank Economic Review, World Bank, vol. 33(2), pages 413-435.
    4. Loka Ashwood & Andy Pilny & John Canfield & Mariyam Jamila & Ryan Thomson, 2022. "From Big Ag to Big Finance: a market network approach to power in agriculture," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 39(4), pages 1421-1434, December.
    5. Loka Ashwood & Andy Pilny & John Canfield & Mariyam Jamila & Ryan Thomson, 2022. "Correction: From Big Ag to Big Finance: a market network approach to power in agriculture," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 39(4), pages 1435-1435, December.
    6. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    7. Thomson,Henry, 2022. "Food and Power," Cambridge Books, Cambridge University Press, number 9781108701594.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Changjun Zheng & Sinamenye Jean-Petit, 2023. "The Effects of the Interactions Between Agro-Production, Economic, and Financial Development on Bank Sustainability," SAGE Open, , vol. 13(2), pages 21582440231, June.
    2. Arnaud Deseau, 2023. "Speed of Convergence in a Malthusian World: Weak or Strong Homeostasis?," AMSE Working Papers 2326, Aix-Marseille School of Economics, France.
    3. Ana Isabel Bento & Carla Cruz & Gabriela Fernandes & Luís Miguel D. F. Ferreira, 2024. "Social Network Analysis: Applications and New Metrics for Supply Chain Management—A Literature Review," Logistics, MDPI, vol. 8(1), pages 1-20, February.
    4. John Strauser & William P. Stewart, 2023. "Landscape Performance: Farmer Interactions across Spatial Scales," Sustainability, MDPI, vol. 15(18), pages 1-19, September.
    5. Daniel Ştefan Armeanu & Georgeta Vintilă & Ştefan Cristian Gherghina, 2017. "Empirical Study towards the Drivers of Sustainable Economic Growth in EU-28 Countries," Sustainability, MDPI, vol. 10(1), pages 1-22, December.
    6. Youngho Kang & Byung-Yeon Kim, 2018. "Immigration and economic growth: do origin and destination matter?," Applied Economics, Taylor & Francis Journals, vol. 50(46), pages 4968-4984, October.
    7. Alcaraz, Carlo & Villalvazo, Sergio, 2017. "The effect of natural gas shortages on the Mexican economy," Energy Economics, Elsevier, vol. 66(C), pages 147-153.
    8. Khalil, Umair, 2017. "Do more guns lead to more crime? Understanding the role of illegal firearms," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 342-361.
    9. Thorsten Lehnert, 2019. "Asset pricing implications of good governance," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-14, April.
    10. Cho, Seo-young & Vadlamannati, Krishna Chaitanya, 2010. "Compliance for big brothers: An empirical analysis on the impact of the anti-trafficking protocol," University of Göttingen Working Papers in Economics 118, University of Goettingen, Department of Economics.
    11. Katsushi S. Imai & Raghav Gaiha & Ganesh Thapa & Samuel Kobina Annim, 2013. "Financial Crisis In Asia: Its Genesis, Severity And Impact On Poverty And Hunger," Journal of International Development, John Wiley & Sons, Ltd., vol. 25(8), pages 1105-1116, November.
    12. Marco Botta & Luca Colombo, 2016. "Macroeconomic and Institutional Determinants of Capital Structure Decisions," DISCE - Working Papers del Dipartimento di Economia e Finanza def038, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    13. International Monetary Fund, 2016. "Republic of Poland: Selected Issues," IMF Staff Country Reports 2016/211, International Monetary Fund.
    14. Arturas Juodis, 2013. "Cointegration Testing in Panel VAR Models Under Partial Identification and Spatial Dependence," UvA-Econometrics Working Papers 13-08, Universiteit van Amsterdam, Dept. of Econometrics.
    15. Díez-Esteban, José María & Farinha, Jorge Bento & García-Gómez, Conrado Diego, 2016. "The role of institutional investors in propagating the 2007 financial crisis in Southern Europe," Research in International Business and Finance, Elsevier, vol. 38(C), pages 439-454.
    16. Vieira, Flávio & MacDonald, Ronald & Damasceno, Aderbal, 2012. "The role of institutions in cross-section income and panel data growth models: A deeper investigation on the weakness and proliferation of instruments," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 127-140.
    17. Nam, Changwoo, 2016. "Impact of Corporate Tax Cuts on Corporate Investment," KDI Policy Forum 264, Korea Development Institute (KDI).
    18. Alfonso Mendoza-Velázquez & Luis Carlos Ortuño-Barba & Luis David Conde-Cortés, 2022. "Corporate governance and firm performance in hybrid model countries," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 21(1), pages 32-58, February.
    19. repec:hal:spmain:info:hdl:2441/dambferfb7dfprc9m052g20qh is not listed on IDEAS
    20. Hakkala, Katariina & Heyman, Fredrik & Sjöholm, Fredrik, 2007. "Cross-Border Acquisitions, Multinationals and Wage Elasticities," Working Paper Series 709, Research Institute of Industrial Economics.
    21. Ensar Yılmaz & Zeynep Kaplan, 2022. "Heterogeneity of market power: firm-level evidence," Economic Change and Restructuring, Springer, vol. 55(2), pages 1207-1228, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rbs:ijbrss:v:11:y:2022:i:10:p:119-139. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Umit Hacioglu (email available below). General contact details of provider: https://edirc.repec.org/data/ssbffea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.