Financial structure gap and bank lending-deposit rate spread in Sub-Saharan Africa: a panel analysis

Kofi Bondzie Afful

Macroeconomics and Finance in Emerging Market Economies, 2025, vol. 18, issue 2, 207-225

Abstract: Sub-Saharan Africa (SSA) has one of the highest lending-deposit spreads. This study addresses a research gap by examining whether financial market structure explains the sub-continent’s high spread. The paper develops an original theoretical model. This is subsequently examined empirically. In and of itself, the study finds that financial market structure has no effect on the spread. However, it has a positive impact when it interacts with the differential between bank and stock market returns. Similarly, banking-sector concentration and the credit-deposit quotient increase the spread. In contrast, the following have a negative influence on the spread, namely: lagged degree of credit market equilibrium, government size and savings rate.

Date: 2025
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DOI: 10.1080/17520843.2021.2012966

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