Regulatory capital requirement and bank stability in Sub-Saharan Africa

Yakubu, Ibrahim Nandom; Bunyaminu, Alhassan

doi:10.1080/20430795.2021.1961558

Cited by 8 publications

(8 citation statements)

References 46 publications

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“…The result indicates that banking regulations seem to become a well-organised strategy factor in fostering stability and minimising the risk of default. Such findings support the work of Ashraf (2017), Ashraf et al (2016a, b), and Yakubu and Bunyaminu (2021), and contradict (Mujtaba et al, 2022), who stated that banks with higher capital ratios are expected to increase in risk-taking. Concerning the macroeconomic factors, the estimates of GDP growth covariates indicate that better economic performance reduced bankruptcy risks and risk-taking.…”

Section: Regression Resultssupporting

confidence: 88%

“…Such findings support the work of Ashraf (2017), Ashraf et al. (2016a, b), and Yakubu and Bunyaminu (2021), and contradict (Mujtaba et al. , 2022), who stated that banks with higher capital ratios are expected to increase in risk-taking.…”

Section: Resultssupporting

confidence: 79%

“…Following Yakubu and Bunyaminu’s (2021) studies, the study utilised longitudinal country-level bank data from African nations from 2000 to 2017. The data in this study are gathered from many source materials.…”

Section: Methodsmentioning

confidence: 99%

“…Similarly, Yakubu and Bunyaminu (2021) for Sub-Saharan and Hunjra et al (2020) for Asian indicate a negative relationship between bank capital and risk-taking. Moreover, according to Dias (2021), the link between capital requirements and banks' risk has an asymmetric pattern.…”

Section: Literature Review 21 Theoretical Issuesmentioning

confidence: 98%

“…Similarly, Yakubu and Bunyaminu (2021) for Sub-Saharan and Hunjra et al. (2020) for Asian indicate a negative relationship between bank capital and risk-taking.…”

Section: Literature Reviewmentioning

confidence: 98%

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Impact of income diversification on bank stability: a cross-country analysis

Adem

2022

AJAR

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PurposeThe impact of diversification on bank stability and risk remains an ongoing topic of discussion with inconclusive results. Hence, this study investigated the implications of income diversification on bank stability within African markets.Design/methodology/approachThe study utilised longitudinal financial data on 45 countries from 2000 to 2017 and employed static and dynamic panel model estimation.FindingsThe results of the study suggest income diversification technique could improve financial stability throughout typical and crisis periods which validate portfolio management theory. The study also confirms the “too big to fail” hypothesis, extensive diversifying over an optimal range negatively impacts stability. Banks with a high level of liquidity, a higher operating efficiency and a larger deposit ratio become more resilient. Banking capital regulations found to be the appropriate monitoring instrument for lowering risks and maintaining stability. However, profitability was found to have a positive effect on bank risk-taking. The finding also suggests that political institutions have substantial, direct implications that are positively related to bank fragility. Macroeconomic factors such as gross domestic product (GDP) growth and inflation also influenced bank stability.Practical implicationsThis study has important implications for bankers, regulators and academicians concerned about the effect of diversification on a bank’s risk-taking or stability in developing economies.Originality/valueTo the best of the author’s knowledge, this is the first study on Africa to analyse the quadratic influence of income diversification and the effects of political institutions on the level of bank stability.

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Section: Regression Resultssupporting

confidence: 88%

Section: Resultssupporting

confidence: 79%

Section: Methodsmentioning

confidence: 99%

Section: Literature Review 21 Theoretical Issuesmentioning

confidence: 98%

“…Similarly, Yakubu and Bunyaminu (2021) for Sub-Saharan and Hunjra et al. (2020) for Asian indicate a negative relationship between bank capital and risk-taking.…”

Section: Literature Reviewmentioning

confidence: 98%

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