Drivers of Cross-Border Banking in Sub-Saharan Africa
IMF Working Papers, July 11, 2019
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Bibliographic details
- Authors: Paul Henri Mathieu, Marco Pani, Shiyuan Chen, Rodolfo Maino
- Published: July 11, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498321549.001
Summary
- Study authors: Paul Henri Mathieu, Marco Pani, Shiyuan Chen, Rodolfo Maino.
- Date: July 11, 2019.
- Using data from pan-African banks’ (PABs) balance sheets and other sources (Orbis, Fitch), the study identifies key patterns of cross-border investment in bank subsidiaries by key banking groups in sub-Saharan Africa (SSA) and discusses determinants of this investment.
- Core conclusion: cross-border banking in SSA is in part driven by a search for yield, diversification, and expansion for strategic reasons.
Data and Methodology
- Data sources: pan-African banks’ (PABs) balance sheets, Orbis, Fitch.
- Empirical approach: 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.
- Outcome measure: annual value of a banking group’s investment in the net equity of its subsidiaries.
Key Findings
- Cross-border investment patterns among key banking groups in SSA are systematically related to host–home characteristics captured in a gravity framework.
- Determinants identified include:
- Search for yield.
- Diversification motives.
- Strategic expansion objectives.
- The gravity-model framework provides an econometric basis for quantifying how bilateral and group-level factors affect annual net equity investment flows to subsidiaries.
Subjects and Keywords (as reported)
- Subjects: 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.
Publication and Document Notes
- Series: Working Paper No. 2019/146.
- Issue: 146.
- Volume: 2019.
- Pages: 45.
- DOI: https://doi.org/10.5089/9781498321549.001.
- ISBN: 9781498321549.
- ISSN: 1018-5941.
IMF Working Paper: "Drivers of Cross-Border Banking in Sub-Saharan Africa", Paul Henri Mathieu, Marco Pani, Shiyuan Chen, and Rodolfo Maino, July 11, 2019.
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