Effects of Financial Inclusion of Small and medium Sized Enterprises on Financial Stability: Evidence from SSA countries

Moeti Damane and Sin-Yu Ho

MPRA Paper from University Library of Munich, Germany

Abstract: We examine the impact of financial inclusion of Sub-Saharan Africa (SSA) small and medium-sized enterprises (SMEs) on financial stability. Results show that financial inclusion of SMEs negatively affects stability in SSA countries, and the negative link is even stronger as levels of financial stability increase across countries. Our findings are consistent with the theory of excessive credit expansion or extreme financial inclusion theory, suggesting that to safely promote SME financial inclusion and foster financial sector stability, efforts should be directed toward improving banking sector risk mitigation efforts, financial sector supervision and strengthening coordination among regional financial sector regulators.

Keywords: Sub-Saharan Africa; Financial Inclusion; Financial Stability; Small and Medium sized Enterprises, Fixed Effect Model; Quantile Regression (search for similar items in EconPapers)
JEL-codes: G00 G2 G21 G28 (search for similar items in EconPapers)
Date: 2024-05-28
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-fdg, nep-fle, nep-pay and nep-sbm
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:121093

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