Legal History, Institutions and Banking System Development in Africa

40 Pages Posted: 28 Feb 2020

See all articles by Samuel Mutarindwa

Samuel Mutarindwa

Jonkoping University - Jonkoping International Business School (JIBS)

Dorothea Schaefer

German Institute for Economic Research (DIW Berlin); JIBS

Andreas Stephan

DIW Berlin, German Institute for Economic Research

Date Written: January 1, 2020

Abstract

This paper links banking systems development to the colonial and legal history of African countries. Specifically, we investigate the impact of differing legal traditions on the development of existing investor and creditor protection, and on African banking systems. Based on a sample of 40 African countries from 2000 to 2016, our empirical findings show a significant dependence of current financial institutions on the legal origin and the colonization type. Findings also reveal that current legal financial institutions are not the major determinants of banking system development, whereas institutional and regulatory quality significantly matter for banking system development in both common and civil law countries. Strong creditor rights reduce the cost of banking in African countries.

Keywords: legal origin, colonial history, financial institutions, banking system, Hausman-Taylor estimation

JEL Classification: G21,G38,G39,K40

Suggested Citation

Mutarindwa, Samuel and Schaefer, Dorothea and Stephan, Andreas, Legal History, Institutions and Banking System Development in Africa (January 1, 2020). DIW Berlin Discussion Paper No. 1844 (2020), Available at SSRN: https://ssrn.com/abstract=3544721 or http://dx.doi.org/10.2139/ssrn.3544721

Samuel Mutarindwa

Jonkoping University - Jonkoping International Business School (JIBS) ( email )

Sweden

Dorothea Schaefer (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany
+49 30 8978 9162 (Phone)
+49 30 8978 9104 (Fax)

JIBS ( email )

Jönköping, 55111
Sweden

Andreas Stephan

DIW Berlin, German Institute for Economic Research ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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