Cross-Border Banking and Banking Crisis in Africa

Charles Adjasi, Isaac Ofoeda (), Khadijah Iddrisu () and Foluso Akinsola ()
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Isaac Ofoeda: University for Professional Studies
Khadijah Iddrisu: SDD University of Integrated Business and Development
Foluso Akinsola: University of Lagos

Chapter Chapter 15 in The Economics of Banking and Finance in Africa, 2022, pp 491-514 from Palgrave Macmillan

Abstract: Abstract Cross-border banking has become an increasingly important feature of African financial systems. However, the impact of cross-border banking on the banking stability and probability of a banking crisis has remained a controversial issue in the literature. For the most part, the literature contends that cross-border banking promotes banking sector stability. This study however seeks to establish the impact of cross-border banking on the probability of a banking crisis in Africa. The study employed data from 52 African countries from 1970 to 2017. We employed the logit regression to test the hypothesis of the study. Again, we estimate the marginal effects of our model. The study provides evidence that cross-border banking, that is, foreign bank presence and participation in the domestic banking sector is more likely to result in a banking crisis in Africa. However, the probability of a banking crisis in Africa as a result of cross-border is not that significant.

Keywords: Cross-border banking; Banking crisis; Marginal effects; Logit regression; Africa (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-3-031-04162-4_15

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DOI: 10.1007/978-3-031-04162-4_15

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