Ethnic Fractionalization, Governance and Loan Defaults in Africa
A theoretical model of an imperfectly competitive loans market that is suitable for emerging economies in Africa
Abstract
We present a theoretical model of an imperfectly competitive loans market that is suitable for emerging economies in Africa. 皇冠体育app model allows for variation in both the level of contract enforcement (the quality of governance) and the degree of market segmentation (the level of ethnic fractionalization). 皇冠体育app model predicts a specific form of nonlinearity in the effects of these variables on loan default. Empirical analysis using African panel data for 110 individual banks in 28 countries over 2000鈥�08 provides strong evidence for these predictions. Our results have important implications for the conditions under which policy reform will enhance financial development.
This is an output from the 鈥楶olitics, Finance and Growth鈥� Project
Citation
Andrianova, S. , Baltagi, B. H., Demetriades, P. and Fielding, D. (2017), Ethnic Fractionalization, Governance and Loan Defaults in Africa. Oxford Bulletin of Economics and Statistics 79: 435-462