Banks Performance and Economic Growth: Evidence from West Africa

Author(s)

Isaac Akpemah Bathuure , Tan Zhongming , Ding Guoping ,

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Volume 8 - October 2019 (10)

Abstract

This paper uses empirical econometric models to analyze Bank performance on GDP using panel data from 15 countries in West Africa. Data from 1996 to 2017 was used to make a statistical inference. Unit root test, cointegration test, fully modified ordinary least square (FMOLS) and Granger causality test were performed. A total of nine variables are employed in the study. GDP per capita, dependent variable which proxy’s economic growth, return on assets and return on equity as independent variables. Government effectiveness, corruption control, interest rate and inflation as control variables. It was discovered that there is stationarity at first difference and that long run relationship exists among the dependent and independent variables. The fully modified OLS results showed that all the independent variables and the control variables have 1% significate relationship with the dependent variable.The regulatory bodies of the various countries in the sub-region are to ensure efficient management of Banks to avoid the situation of institutional failure which is a major issue in most developing countries. Stringent measures must equally be put in place to fight corruption

Keywords

Bank performance, economic growth, financial sector, West Africa

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