Effects of financial development on mortgage development in Africa: an application of GMM dynamic pooled estimator

Yakubu Awudu Sare, Ezekiel Davies and Joseph Dery Nyeadi

Journal of Financial Economic Policy, 2022, vol. 14, issue 5, 633-650

Abstract: Purpose - This study purposely re‐examine the mortgage–finance nexus in Africa. Design/methodology/approach - This study adopted a panel data set spanning over the period 1995–2017 by using system generalized method of moments (GMM) dynamic pooled estimator developed by Arellano and Bond (1991) and Arellano and Bover (1995) involving 51 African countries. Findings - The findings discovered that financial development (bank asset) affects mortgage development positively and this effect is highly significant while broad money supply as a measure of financial development impedes mortgage development in Africa. Furthermore, with the introduction of the quadratic term, broad money supply established a U-shaped relationship with mortgage financing indicating that more money in circulation facilitates mortgage development in Africa. However, the shape of the other variables depends largely on the nature of proxy used. Originality/value - This study is unique in many aspects. First, examining the extant literature on the financial development and mortgage financing nexus, to the best of the authors’ knowledge, no study is cited at the African level with this relationship. Secondly is the empirical model, as it used the system GMM dynamic pooled estimator developed by Arellano and Bond (1991) and Arellano and Bover (1995) to establish whether there is any effect of finance–mortgage nexus.

Keywords: Financial development; Mortgage development; Africa; Generalized methods of moments (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfeppp:jfep-08-2021-0206

DOI: 10.1108/JFEP-08-2021-0206

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