Bank regulation, supervision and lending: empirical evidence from selected Sub-Saharan African countries

This study investigates the impact of bank regulation and supervision on bank credit in 23 Sub-Saharan African (SSA) countries and their low- and middle-income groups from 1995 to 2017. The long-run results indicated that stringent entry barriers and supervisory power reduced lending, but supervisory power mitigated the negative effect of entry barriers. Furthermore, positive shocks to entry barriers impacted negatively on bank credit, while negative shocks to capital requirements had an adverse impact on lending. In the short run, positive shocks to entry barriers, activity restrictions and capital regulations led to increases in bank credit, particularly in low-income SSA economies.

Automated summary

This study examines the effects of bank regulation and supervision on bank credit in Sub-Saharan African countries, with a focus on low- and middle-income groups. The findings reveal that strict entry barriers and supervisory power tend to decrease lending, although supervisory power can alleviate the negative impact of entry barriers. Additionally, positive shocks to entry barriers have a negative impact on bank credit, while negative shocks to capital requirements have adverse effects on lending. In the short term, positive shocks to entry barriers, activity restrictions, and capital regulations result in increased bank credit, particularly in low-income countries in Sub-Saharan Africa.