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Financial determinants of informal financial development in Sub-Saharan Africa

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  • Asongu, Simplice
  • Soumtang, Valentine
  • Edoh, Ofeh

Abstract

This study assesses financial determinants of informal financial sector development in 48 Sub-Saharan African countries for the period 1995-2017. Quantile regressions are used as the empirical strategy which enables the study to assess the determinants throughout the conditional distribution of informal sector development dynamics. The following financial determinants affect informal financial development and financial informalization differently in terms of magnitude and sign: bank overhead costs; net internet margin; bank concentration; return on equity; bank cost to income ratio; financial stability; loans from non-resident banks; offshore bank deposits and remittances. The determinants are presented from a plethora of perspectives, inter alia: U-Shape, S-Shape and positive or negative thresholds. The study not only provides a practical way by which to assess the incidence of financial determinants on informal financial sector development, but also provides financial instruments by which informal financial development can be curbed.

Suggested Citation

  • Asongu, Simplice & Soumtang, Valentine & Edoh, Ofeh, 2021. "Financial determinants of informal financial development in Sub-Saharan Africa," MPRA Paper 111559, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:111559
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    References listed on IDEAS

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    9. Simplice A. Asongu & Paul N. Acha-Anyi, 2017. "ICT, conflicts in financial intermediation and financial access: evidence of synergy and threshold effects," Netnomics, Springer, vol. 18(2), pages 131-168, December.
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    14. Simplice A. Asongu, 2013. "Fighting corruption in Africa: do existing corruption‐control levels matter?," International Journal of Development Issues, Emerald Group Publishing Limited, vol. 12(1), pages 36-52, April.
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    19. Simplice Asongu, 2015. "Liberalisation and Financial Sector Competition: A Critical Contribution to the Empirics with an African Assessment," South African Journal of Economics, Economic Society of South Africa, vol. 83(3), pages 425-451, September.
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    1. Simplice Asongu & Nicholas M. Odhiambo, 2023. "Health performance and economic growth in sub-Saharan Africa: new evidence based on quantile regressions," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 50(12), pages 1655-1671, May.
    2. Asif, Zainab & Chinzara, Zivanemoyo & Lahiri, Radhika, 2023. "The role of risk and institutions in the adoption and diffusion of technologies: Evidence from Sub-Saharan Africa," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 16-33.

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    More about this item

    Keywords

    Informal finance; financial development; Africa;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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