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PurposeThis paper examines the effect of both de jure and de facto measures of financial integration on bank profitability in five regional economic communities of Africa.Design/methodology/approachUsing panel data from 405 banks operating in 47 African countries across five regional economic communities over 2007–2014, the study constructs a composite measure of bank profitability. The study then employs the dynamic two-step system GMM estimation technique to test the effect of both de jure and de facto measures of financial integration on bank profitability in Africa and across five sub-regional markets.FindingsOverall, the results support a positive relationship between financial integration and overall bank profitability in Africa, except for the Arab Maghreb Union and Southern Africa Development Community.Practical implicationsThe findings of this study suggest that increased financial integration in Africa directly improves bank’s overall profitability and the variations among the sub-regional markets inform tailored policy initiatives.Originality/valueTo the best of the authors' knowledge, this is the first study on Africa to employ a composite measure of bank profitability to assess its determinants. It is also the first to include both de facto and de jure financial integration measures in a single study. This is also the first largest comparative study on bank profitability in Africa.

Risk is an inherent aspect of the banking business, and the effect of financial integration and changes to competition on banking stability is a central issue in the active debate among academics, practitioners, and policymakers in the financial services industry. This debate is even more critical for emerging economies, given the prevalence of information asymmetry in largely underdeveloped and bank-dominated financial systems (Bourgain et al., 2012). Additionally, excessive bank risk-taking poses a threat to bank profitability and survival and imperils the stability and productivity of economies overall (Schoemaker, 2011). 1) Following the recent global financial crisis, the debate has largely centered on the role played by financial integration in the crisis and how future such occurrences can be averted.Generally, banking supervision is guided by the fundamental principle that actors' distortion of the bank market structure pose a threat to banking stability through influencing the risk-taking

Being economic boosters, foreign direct investment (FDI) and financial sector development (FSD) are highly recommended for developing countries. It is therefore critical and important to examine the impact of both FDI and FSD on energy consumption. This chapter examines the link between FDI, FSD, and energy consumption in Africa and also the role of institutional quality in this context. The results establish that both FDI and FSD have a significant positive impact on energy consumption. It is also established that there is an inverse relationship between institutional quality and energy use. Finally, it is proved that quality institutions moderate the link between FDI, FSD, and energy use in Africa.