A dynamic analysis on foreign bank entry Nexus economic growth in Sub-Sahara African countries

Abstract

This study investigated the direct link between foreign bank entry and economic growth in Sub-Sahara African countries using a dynamic generalized method of moment estimator. It also studied a comparative analysis on banking environment for SSA countries that open and restrict banking industries to foreign ownership using descriptive analysis. The descriptive evidence suggests that SSA countries that allowed foreign bank entry have better banking service access, competition and depth than SSA countries that restrict banking industries to foreign ownership. Econometric estimation result shows a foreign bank asset share has a direct positive effect on economic growth. The findings of this study provide imperative policy implication to SSA countries that did not open their banking sector to foreign investment. They could open the door for foreign bank involvement in the banking industries and reap all the good benefits that SSA countries that open their banking industries to foreign investors are enjoying.

Keywords

• foreign bank entry
• economic growth
• ssa
• gmm estimator