Foreign bank presence and inclusive growth in Africa: the moderating role of financial development

Abstract

Purpose The purpose of this study is to assess the extent to which the nexus between foreign bank presence (FBP) and inclusive growth is being impacted by the financial development. Design/methodology/approach The study used a two-stage system generalized method of moment (GMM), using 28 African countries from the period 2000 to 2018. Findings The study found a positive effect of FBP on inclusive growth. While financial development magnifies the positive effect of FBP, inclusive growth nexus, it has a direct effect on inclusive growth. Practical implications For Africa to ascertain the positive effect of FBP on inclusive growth, financial system must be developed to reduce the cream-skim behavior of foreign banks. Originality/value This paper assess the extent to which developing economy's developed financial system form synergies with FBP to further enhance the inclusiveness of growth.