Implications of bank competition, financial stability, and gender gap on access to finance: Evidence from Sub-Saharan Africa

Whether bank competition promotes access to finance is highly debated in economic literature and policy circles. Amidst this debate, this paper investigates the implications of bank competition, financial stability, and gender gap on access to finance for 40 Sub-Saharan African countries using 12,504 firm-level observations from the World Bank Enterprise Survey. In addition to structural measures, competition has been measured by three non-structural measures (Lerner index, Boone indicator, and Panzar-Rosse H-statistic). Results obtained through the probit model and probit model with sample selection (PSS) suggest that a higher degree of bank competition positively affects firm's credit availability in the Sub-Saharan African region. Results also indicate that firms owned by female entrepreneurs are more likely to report greater difficulties in obtaining formal finance. The findings suggest that policymakers and other stakeholders should direct policy actions that promote competition in the credit market by reducing the cost of credit.