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Kedir, Abbi M. and Iftikhar, Syed Faizan and Murinde, Victor and Dia Kamgnia, Bernadette (2018) 'Bank fragility in Africa: GMM dynamic panel data evidence.' Transnational Corporations Review, 10 (2). pp. 170-178.

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Abstract

This study investigates the impact of bank-level and macroeconomic variables on bank fragility using a dynamic two-step GMM panel estimator on 433 banks in 46 African countries over the period 1997–2012. The study finds that both bank characteristics and macroeconomic variables are key drivers of bank fragility. The past experience of higher levels of non-performing loans (NPLs) significantly and positively determines current levels of NPLs. The growth of gross loan is negative and significant but economic growth leads to higher NPLs. The equity to assets ratio and the log of assets of banks are negatively associated with NPLs suggesting their potential to provide buffers to banks. Equally, total assets reduce bank fragility. These findings have important policy implications. The study shows that credit risk management initiatives, bank operation oversight and regulations should not be restricted in the times of financial crises, even during positive economic growth episodes in the business cycle. JEL Classification: G01, G21, G28

Item Type: Journal Article
Keywords: Bank characteristics, macroeconomic variables, regulation, NPLs, GMM
SOAS Departments & Centres: Departments and Subunits > School of Finance & Management
ISSN: 19186444
Copyright Statement: © 2018 Denfar Transnational Development INC. This is the version of the article accepted for publication in Transnational Corporations Review published by Taylor and Francis: https://doi.org/10.1080/19186444.2018.1475105
DOI (Digital Object Identifier): https://doi.org/10.1080/19186444.2018.1475105
Date Deposited: 15 Oct 2018 14:53
URI: http://eprints.soas.ac.uk/id/eprint/26730

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