Social and Economic Growth in Sub-Saharan Africa: Is the Soundness of Banking a missing element?

Abstract

The importance of the banking industry has not been disputed, regardless where the research is undertaken. However, there is limited evidence on the significance of the sound banking system on economic and social growth. Using pooled panel fixed effect on 13 Sub-Saharan Africa countries from 2006 to 2016, this research assesses the significance of sound banking system in enhancing economic and social growth. The findings indicate that sound banking enhances economic and social growth. In addition, sound banking system encourages competition that leads to efficiency and hence a lower lending rate. The findings imply the need of the governments to strengthen banking supervision that may enhance sound banking policies.

Keywords: Sound; Banking; Economic; Social; Growth

Australian Academy of Accounting and Finance Review, vol 4, issue 3, July 2018, pp 119-136