The Impact of Institutions on Bank Governance and Stability: Evidence from African Countries

Discussion Papers 1739, 29 S.

Samuel Mutarindwa, Dorothea Schäfer, Andreas Stephan

2018

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Abstract

This paper sheds new light on how African countries’ legal systems and institutions influence the governance and stability of their banks. We find that institutional factors, in particular the legal family of origin, political stability, contract enforcement and strength of investor protection promote central corporate governance reforms. Using a difference-in-difference approach, we also reveal that those reforms mediate the impact of institutions on banks. If countries have a corporate governance reform in place their banks show better internal governance and higher stability.

Dorothea Schäfer

Forschungsdirektorin in der Abteilung Makroökonomie



JEL-Classification: G21;G28;G30;G32;G38
Keywords: African banks, corporate governance, legal systems, institutions, bank stability