Abstract:
The study determines the nexus between bank stability and economic growth
in Sub-Saharan Africa. For the purpose of this study, both the short-run and
long-run dimensions was captured to assess the influence of bank stability on
economic growth. Through the explanatory research design and quantitative
research approach, the analysis of the study were performed. The secondary
data was utilised in a panel form, and span 2000 to 2017. Analysis of the study
was conducted with the aid of the System Generalised Method of Moments
(SGMM). The study sought to examine the role of bank stability in
influencing economic growth. In this regard, the study’s objectives were to
examine the short-run and long-run relationships between bank stability and
economic growth. The study reveals several findings that are significant and
useful for policy. Findings from the study can be categorized into two: the
short-run effect of bank stability on economic growth; and the long-run effect
of bank stability on economic growth. Firstly, on the relationship between
bank stability and economic growth, the study finds that the stability of the
banking sector has a significant positive effect on economic activity.
Secondly, the study finds that bank stability has a significant positive impact
on economic growth in the long-rum in SSA. It is recommended that
governments in the Sub-Saharan African (SSA) countries and regulators must
make attempts to improve regulations in the banking sector in terms of activity
restriction and supervision to minimize bank risk taking behaviours in their
economies so as to ensure a sustainable banking sector which can have a
positive impact on economic growth.
