Bank Stability and the Discouraged Borrower Phenomenon: Evidence from African Firms

Cherif Abdramane (), Désiré Avom () and Dieu-Merci Wilhis ()
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Cherif Abdramane: Yaoundé, Cameroon
Désiré Avom: Yaoundé, Cameroon
Dieu-Merci Wilhis: Yaoundé, Cameroon

No 26/046, Working Papers from European Xtramile Centre of African Studies (EXCAS)

Abstract: Discouraged borrowers are a strange phenomenon that requires particular attention. This paper examines whether banking stability influences the discouragement of firms on the credit market in some African countries. The study selected a sample of firms from 22 African countries based on information contained in the World Bank Enterprise Survey (WBES) database. We find that stability in the banking system reduces the discouragement of firms on the credit market in Africa. In other words, in countries with a stable banking system, firms are less likely to be discouraged from loan application. The findings are robust to the various tests. These results call on the political authorities to strengthen the regulatory framework for banking activity. This mainly involves prudential rules designed to clean up and reduce the risk of crises occurring. In addition, it is important to put in place measures to monitor possible links between major global banks and certain banking groups operating in Africa, in order to mitigate the risk of a banking or financial crisis spreading from one region to Africa.

Keywords: Banking Stability; Discouraged Borrowers; Self-Rationing; Africa. (search for similar items in EconPapers)
JEL-codes: G21 G28 O16 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2026-01
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http://publications.excas.org/RePEc/exs/exs-wpaper ... om-African-Firms.pdf Revised version, 2026 (application/pdf)

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