Elikplimi Komla Agbloyor

Financial Development and the Social Cost of Financial Intermediation in Africa

ABSTRACT This article investigates the effect of financial development on the social costs of financial intermediation across a large number of banks in Africa. The study distinguishes between countries that are financially developed and those that are not financially developed to examine the impact of financial development on the social costs of financial intermediation. A sample of 260 banks from 29 countries in Africa is used over an 8-year period from 2006 to 2013. We employ both Random Effect and GMM techniques to resolve the issues of unobserved heterogeneity and endogeneity. We observe that overall, financial development reduces the social costs of intermediation. We also determine that the social costs of intermediation are lower for countries that have more developed financial systems compared to those with less developed financial systems. Our study is useful because it suggests that if countries want to reduce their social costs of intermediation, they should develop their financial systems.

Correlates of poverty in Africa: Exploring the roles of remittances, financial development, and natural resources

Purpose - The purpose of this paper is to examine how remittances, financial development (FD), and natural resources and their different transmission channels can be used to reduce poverty in Africa. Design/methodology/approach - Using the Human Development Index (HDI) as the measure of welfare, the authors specify these relationships using the System GMM estimator approach. Findings - The authors hypothesise that for remittance to effectively improve welfare, the recipient of remittances must have access to credit to profitably utilise the monies. Again, the authors assert that FD can be effective in improving welfare when development of the sector actually benefits the poor. The authors provide empirical support for these hypotheses using 54 African countries covering the period 1990-2012. The findings also show that the North African region has been able to utilise its oil rents in particular to improve welfare unlike the Sub-Saharan counterpart. Originality/value - This paper is the first to jointly estimate the impact of remittances, FD, and natural resources on welfare using a comprehensive measure of poverty – HDI.

Does corporate governance structures promote shareholders or stakeholders value maximization? Evidence from African banks

The purpose of this paper is to explore the relationship between corporate governance structures and stakeholder and shareholder value maximization perspectives in 267 African banks from 2006 to 2011.,The authors used the Prais–Winsten ordinary least squares and random effect regression models to explore this relationship to ensure consistency and efficiency in results. The data for this study were collected from Bankscope.,The results of this study show that corporate governance structures such as CEO duality, nonexecutive members and extreme large board size lead to a reduction in both shareholder and stakeholder value maximization. However, audit independence and board size also promote both shareholder and stakeholder value maximization. Although gender diversity promotes profit maximization, it was not significant in any of the models estimated. The results further suggest that the same corporate governance structures promote and detract shareholder and stakeholder value maximization in Africa although the effect of corporate governance structures was weightier on shareholder value maximization confirming the agency theory.,From these findings, bank management must pursue the institution of good corporate governance structures and avoid weak corporate governance structures to promote shareholder and stakeholder value maximization. Also equity holders may have to pay particular attention to corporate governance structures because they benefit the most from the institution of good corporate governance structures.,This study explores and compares how corporate governance structures promote shareholder and stakeholder value maximization separately in African banks. To the best of the authors’ knowledge, this is the first of such studies.

Do Remittances Matter in Accelerating Labour Productivity and Capital Accumulation

In this paper, we examine the effect of remittances on labour productivity and capital accumulation through various channels. Our panel includes 25 African countries with data from 1990 to 2013. We employ the two-step generalized methods of moments estimator. The main results from this study are that remittances on their own do promote labour productivity but not capital accumulation. Indeed, remittances are observed to have a positive impact on labour productivity and a negative impact on capital accumulation. Moreover, remittances do not promote labour productivity in the presence of high natural resource endowment. The effect of remittances on labour productivity is not clear when we interact remittances with life expectancy. Further, remittances tend to promote capital accumulation in the presence of high quality human capital.

Financial Markets and Cross Border Mergers and Acquisitions in Africa

Cross border M&As have increasingly become a major component of total FDI flows in both developing and developed economies. In this paper, we investigate the relationship between financial markets and cross border M&A activity on the African continent. We focus on cross border M&A transactions where the equity stake acquired is equal to or exceeds 10% of the voting equity of the target firm. Our sample consists of a maximum of 14 African countries with data covering the period 1993-2008. We use panel data techniques and estimate our empirical models via a Feasible Generalized Least Squares (FGLS) estimation which corrects for heteroskedasticity and autocorrelation. Our findings suggest that banking sector development promotes cross border M&A activity on the African continent. We do not find strong and compelling evidence that stock market development promotes cross border M&A activity. We also provide new and exciting evidence that cross border M&A activity promotes both stock market development and banking sector development in the African context.