The African Credit Trap

Preprint OPEN
Svetlana Andrianova; Badi Baltagi; Panicos Demetriades; David Fielding;
  • Subject: Dynamic panel data; African financial under-development; African credit markets | Dynamic panel data, African financial under-development, African credit markets
    • jel: jel:O16 | jel:G21
    mesheuropmc: education | health care economics and organizations

We put forward a plausible explanation of African financial underdevelopment in the form of a bad credit market equilibrium. Utilising an appropriately modified IO model of banking, we show that the root of the problem could be unchecked moral hazard (strategic loan def... View more
  • References (14)
    14 references, page 1 of 2

    Allen, F., I. Otchere, and L. W. Senbetm (2010): “African Financial Systems: a Review,” SSRN working paper id 1569613.

    Andrianova, S., P. Demetriades, and A. Shortland (2008): “Government Ownership of Banks, Institutions and Financial Development,” Journal of Development Economics, 85, 218-52.

    Arellano, M., and S. Bond (1991): “Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,” Review of Economic Studies, 58, 277-97.

    Blundell, R., and S. Bond (1998): “Initial Conditions and Moment Restrictions in Dynamic Panel-Data Models,” Journal of Econometrics, 87, 115-43.

    Demetriades, P., and S. Law (2006): “Finance, Institutions and Economic Development,” International Journal of Finance and Economics, 11, 245-60.

    Easterly, W., and R. Levine (1997): “Africa's Growth Tragedy: Policies and Ethnic Divisions,” The Quarterly Journal of Economics, 112(4), 1203-50.

    Freixas, X., and J. Rochet (1997): Microeconomics of Banking. MIT Press, Cambridge, Mass.

    Gries, T., M. Kraft, and D. Meierrieks (2009): “Linkages Between Financial Deepening, Trade Openness and Economic Development: Causality Evidence from Sub-Saharan Africa,” World Development, 37(2), 1849-60.

    Honohan, P., and T. Beck (2007): Making Finance Work for Africa. The World Bank, Washington, DC.

    Kaufmann, D., A. Kraay, and M. Mastruzzi (2009): “Governance Matters VIII: Aggregate and Individual Governance Indicators 1996-2008,” The World Bank, Policy Research Working Paper 4978.

  • Metrics
Share - Bookmark