PurposeThis study investigates the extent to which, and in what ways and capacities, the incidence of adverse economic conditions burdening the masses, on the macro-level, increases the propensity for the generation of political instability/violence.Design/methodology/approachDrawing on data from a cross-section of 25 Sub-Saharan African (SSA) countries for the period 2005–2019, fixed effects (FE) and generalized method of moments (GMM) estimations are used to determine the nature and significance of the independent variable (economic condition), complemented by three control variables, on the dependent WGI-defined variable political stability scored on the basis of a continuum from −2.5 (most unstable) to +2.5 (most stable). For the link between political instability and socioeconomic conditions, the study employs a construct derived from frustration-aggression and relative deprivation theory.FindingsThe study links socioeconomic adversity to political instability in the context of SSA. In addition, larger populated countries exhibit a greater propensity to political instability than smaller populated countries. In contrast, foreign direct investment (FDI) appears to have no real effect, positive or negative, on political stability.Practical implicationsPoor living conditions seem to be strongly associated with a high risk of political violence in SSA. To buoy socioeconomic status, poverty alleviation needs be elevated into a key initiative in the decision-making agenda, at all levels of governance, with real targeted strides achieved in terms of enhancement of the standard of living of the masses. In addition, policies that control population need to be inaugurated hand-in-hand with welfare measures and a more equitable balancing of the distribution of resources in the society.Originality/valueGiven the high regional incidence of civil strife and violence, combined with a dearth of research of an empirical nature on political risk in SSA, this study provides a largely ignored and useful context on SSA apart from studies on the incidence of violence that consider the developing countries as a monolithic whole.

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The study examines the possibility of having a very low rate of unemployment in Nigeria, if there is a reduced rate of corruption in the long‐term. While using cointegration regressions and Vector Error Correction Mechanism (VECM) over the period 1996–2020, it is affirmed that corruption could increase unemployment rate in the long run. The two corruption indicators employed (control of corruption and corruption index) are found to have a substantial effect on unemployment rate. Further evidence confirms that corruption and unemployment are cyclically interdependent. Findings indeed stress that a high level of corruption is harmful to employment growth. On the other hand, in the absence of sufficient job opportunities, rent‐seeking government officials would be more interested in collecting bribes from job seekers, which results in sustained unlawful practices among the public officials. Thus, adopting effective corruption‐control measures is critical. It is therefore suggested that to effectively tackle corruption incidents, there should be incentives for citizens or public officials to report bribery and the process of reporting corruption incidents should be further simplified. Strengthening anti‐corruption agencies and developing a sound legal framework that promotes a culture of lawfulness and impeccable practices in the public sector are central.

The study examines the interaction effect of trade and institutional quality on financial sector development in 20 leading economies in sub-Saharan Africa selected based on 2018 GDP per capita ranking (top 20 richest economies by GDP per capita released by the IMF) over the period 2005–2020. Using system-generalised method of moments estimation, the results indicate that the effect of the interaction term of trade and regulatory quality on financial development is positive and significant. Further findings show unidirectional causality running from the interaction term to financial development, implying that the likelihood of trade enhancing financial development depends on the soundness of the regulatory framework. It is confirmed that the magnitude and direction of the effect of trade on financial development are sensitive to the quality of institutions. Therefore, the poor quality of regulations on business activities and financial services could undermine the salutary impact of trade on financial development. It is suggested that creating a conducive regulatory environment to improve the level of financial development is crucial for mitigating the potential impact of the weak institutional quality risks. This remains a significant prerequisite for having a competitive business environment, thereby stimulating the role of trade in the process of financial development.