Economic freedom, corruption and bank stability: evidence from sub-Saharan Africa

Q1 Social Sciences

Journal of Financial Crime Pub Date : 2023-06-20 DOI:10.1108/jfc-04-2023-0087

Baba Mohammed Adam, E. Sarpong-Kumankoma, V. Fiador

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Abstract

Purpose This study aims to examine the impact of economic freedom and corruption on bank stability in sub-Saharan Africa (SSA). Design/methodology/approach This study uses 38 countries in SSA from 2008 to 2019 using system GMM technique. Findings The authors found that greater economic freedom increases economic efficiency through improving bank stability. Besides this, the authors also find that banks in environments with greater business freedom, financial freedom, trade freedom and investment freedom are less prone to solvency. The results also show that corruption improves bank stability, suggesting evidence of the “grease the wheels” hypothesis. Practical implications The results suggest to policymakers that a high economic freedom may be an appropriate policy toward enhancing bank stability. Besides this, the results also suggest to policymakers to prioritize addressing the core issues that encourage corruption to extort bribes. Originality/value This study provides insightful discussion on whether economic freedom and its subcomponents and corruption have an effect on bank stability in SSA.

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经济自由、腐败和银行稳定性:来自撒哈拉以南非洲的证据

本研究旨在探讨经济自由和腐败对撒哈拉以南非洲(SSA)银行稳定性的影响。本研究使用系统GMM技术从2008年到2019年在SSA的38个国家进行了研究。研究结果作者发现，更大的经济自由度通过提高银行稳定性来提高经济效率。除此之外，作者还发现，在商业自由度、财务自由度、贸易自由度和投资自由度较大的环境中，银行偿付能力的可能性较小。研究结果还表明，腐败提高了银行的稳定性，为“润滑车轮”假说提供了证据。实际意义研究结果提示政策制定者，高度经济自由度可能是提高银行稳定性的适当政策。除此之外，研究结果还建议决策者优先解决鼓励腐败勒索贿赂的核心问题。原创性/价值本研究对经济自由及其子成分和腐败是否对SSA银行稳定性有影响进行了深刻的讨论。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of Financial Crime Social Sciences-Law

CiteScore

3.10

自引率

0.00%

发文量

期刊介绍： The Journal of Financial Crime, the leading journal in this field, publishes authoritative, practical and detailed insight in the most serious and topical issues relating to the control and prevention of financial crime and related abuse. The journal''s articles are authored by some of the leading international scholars and practitioners in the fields of law, criminology, economics, criminal justice and compliance. Consequently, articles are perceptive, evidence based and have policy impact. The journal covers a wide range of current topics including, but not limited to: • Tracing through the civil law of the proceeds of fraud • Cyber-crime: prevention and detection • Intelligence led investigations • Whistleblowing and the payment of rewards for information • Identity fraud • Insider dealing prosecutions • Specialised anti-corruption investigations • Underground banking systems • Asset tracing and forfeiture • Securities regulation and enforcement • Tax regimes and tax avoidance • Deferred prosecution agreements • Personal liability of compliance managers and professional advisers