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Differences in African Banking Systems: Causes and Consequences

Aufsätze referiert extern - Web of Science

Samuel Mutarindwa, Dorothea Schäfer, Andreas Stephan

In: Journal of Institutional Economics 17 (2021), 4, S. 561–581


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.

Dorothea Schäfer

Research Director Financial Markets in the Macroeconomics Department

Topics: Business cycles

JEL-Classification: G21;G38;G39;K15;K40
Keywords: banking systems; colonial history; correlated random effects model; financial institutions; legal origin