Domestic Arrears and Financial Stability: The Role of Institutional Factors

William Godfred Cantah (), William Brafu-Insaidoo and Eric Bondzie
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William Godfred Cantah: University of Cape Coast

Eastern Economic Journal, 2022, vol. 48, issue 1, No 2, 45-62

Abstract: Abstract This study examines the impact of government payment arrears accumulation on the stability of the banking industry, taking into account the role played by institutional quality in 17 selected SSA countries. The study employed a panel threshold regression model using data from World Bank and International Monetary Fund databases between 2005 and 2018. The key finding from the analysis indicates that arrears accumulation adversely affects banking sector stability, but with institutional quality, the effect is reduced. As a result, public policy should aim at clearing arrears and improving the quality of institutions.

Keywords: Financial stability; Domestic arrears; Institutional quality; Sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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DOI: 10.1057/s41302-021-00195-7

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