A new GLO Discussion Paper links the African banking system development to the colonial and legal history of the respective countries.
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GLO Discussion Paper No. 778, 2021
Differences in African Banking Systems: Causes and Consequences – Download PDF
by Mutarindwa, Samuel & Schäfer, Dorothea & Stephan, Andreas
GLO Fellow Dorothea Schäfer & GLO Affiliate Samuel Mutarindwa
Author Abstract: This paper links banking system development to the colonial and legal history of African countries. Based on a sample of 40 African countries from 2000 to 2018, our empirical findings show a significant dependence of current financial institutions on the inherited legal origin and the colonization type. Findings also reveal that current financial legal institutions are not major determinants of banking system development, and that institutional development and governance quality are more important. A high share of government spending relative to GDP also positively affects banking system development in African countries.
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