Browsing by Author "Molaba, Kamogkelo"

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    Linking banking sector competition and access to finance: the case of select Sub-Saharan African countries
    (University of the Witwatersrand, Johannesburg, 2023) Molaba, Kamogkelo; Gwatidzo, Tendai
    Using multi-year firm-level data of 27 Sub-Saharan countries from the World Bank Enterprise Survey (WBES), this study investigates the link between banking sector competition and firms’ access to finance. The paper employs a probit model to measure the link between banking sector competition and access to finance by observing the impact of the four measures of competition namely: CR3, the Panzar and Rosse H-statistic, the Lerner index and the Boone indicator on credit constraints and financing obstacles whilst controlling for certain firm-level and country-level factors. The results are dominantly in line with the market power hypothesis which posits that banking sector competition improves access to finance. Additionally, the link between competition and access to finance depends on other firm-level variables such as top manager experience and industry as well as country-level variables such as institutional quality, credit information and strength of legal rights. The results of this paper are overall consistent with evidence provided by other studies that support the market power hypothesis which suggests that competitive conduct in the banking sector improves access to finance. The policy implications drawn from this study are that policymakers in the SSA region need to implement policies that strengthen competition in the banking sector without hindering efforts to strengthen banks. Policymakers need to also regulate the financing of business by banks to ensure that funds are directed at growing sectors and businesses that will in turn influence the growth of the economy