Abstract:
ABSTRACT
The purpose of this study is to enhance the understanding of the role of specific
institutional structures (country-level corporate governance structures,
economic institutions, political institutions, banking sector regulations) in the
relationship between foreign bank penetration and banking sector stability, with
a special focus on the sub-Saharan Africa’s banking sector. The first and second
objectives provides insights on how country-level corporate governance
structures and economic institutions influence banking sector stability in sub Saharan Africa. The third objective investigates the relationship between
foreign bank penetration and banking sector stability, as well as how country level corporate governance structures and economic freedom conditions the
relationship. The last objective contains analysis of how specific banking sector
regulations condition the relationship between foreign bank penetration and
banking sector stability in sub-Saharan African economies. Limited by data
availability of the key variables of interest, the study period spans 2007 to 2017.
The analytical technique employed was system Generalised Method of
Moments. The results show that, country level corporate governance structures
and economic institutions have a positive influence on banking sector stability.
Again, in terms of banking sector stability, host economies gain from foreign
bank operations than home economies. Moreover, country level corporate
governance structures and economic institutions positively moderates the
relationship between foreign bank penetration and banking sector stability.
Finally, there is evidence of regulatory arbitrage that could potentially harm the
banking sector stability of sub-Saharan African economies
