IMF Working Papers

Drivers of Cross-Border Banking in Sub-Saharan Africa

ByPaul Henri Mathieu, Marco Pani, Shiyuan Chen, Rodolfo Maino

July 11, 2019

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Paul Henri Mathieu, Marco Pani, Shiyuan Chen, and Rodolfo Maino. "Drivers of Cross-Border Banking in Sub-Saharan Africa", IMF Working Papers 2019, 146 (2019), accessed 12/24/2025, https://doi.org/10.5089/9781498321549.001

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Using data collected from pan-African banks’ (PABs), balance sheets and other sources (Orbis, Fitch), this study identifies some key patterns of cross-border investment in bank subsidiaries by key banking groups in sub-Saharan Africa (SSA) and discusses some of the determinants of this investment. Using a gravity model relating the annual value of a banking group’s investment in the net equity of its subsidiaries to a set of explanatory variables, the analysis finds that cross-border banking is in part driven by a search for yield, diversification, and expansion for strategic reasons.

Subject: Banking, Cross-border banking, Econometric analysis, Exchange rates, Financial institutions, Financial services, Foreign exchange, Gravity models, Inflation, Prices, Stocks

Keywords: Africa, Bank leverage, bank subsidiary, banking group variable, break, center, Cross-border banking, Cross-border banking flows, exchange rate, Exchange rates, Global, Global banks, Gravity models, Group profitability, Group size, host country pair, Inflation, net equity, North Africa, pan-African banking groups, Stocks, Sub-Saharan Africa, vis-à-vis intra-group, West Africa, WP

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