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Article
Publication date: 30 May 2024

Abraham Emuron, D.P. van der Nest and Cephas Paa Kwasi Coffie

This paper employs data from the World Bank to examine the effect of traditional banks on FinTech and financial development in the Southern African Development Community (SADC…

Abstract

Purpose

This paper employs data from the World Bank to examine the effect of traditional banks on FinTech and financial development in the Southern African Development Community (SADC) region.

Design/methodology/approach

The study employs the Generalized Method of Moments (GMM) as the primary data analysis method.

Findings

The findings of the study demonstrate a bi-directional relationship between traditional financial institutions and FinTech. Traditional financial institutions are observed to facilitate the adoption of FinTech solutions, whilst the disruptive effects of FinTech incentivize traditional banks to adapt to the changing financial landscape and tailor their service and product offerings to reflect recent technological advancements. Consequently, there exists a positive relationship between traditional financial institutions and financial development in the SADC region.

Practical implications

Our findings suggest the need for market liberalization and enhanced institutional quality controls for policymakers. Traditional banks must adapt their business models and incorporate FinTech solutions to remain competitive and relevant. Collaborative partnerships between traditional banks and FinTech firms have emerged as a practical approach to leverage the strengths of both sectors.

Originality/value

This is one of the first studies to examine the role of traditional financial institutions in FinTech and financial development using GMM in the SADC region.

Details

African Journal of Economic and Management Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2040-0705

Keywords

Article
Publication date: 11 August 2021

Randolph Nsor-Ambala and Cephas Paa Kwasi Coffie

This paper aims to examine the effect of corruption on foreign direct investment (FDI) inflow in Ghana. This provides answers to the call for further empirical examination of the…

Abstract

Purpose

This paper aims to examine the effect of corruption on foreign direct investment (FDI) inflow in Ghana. This provides answers to the call for further empirical examination of the contextual impact of corruption on FDI inflow.

Design/methodology/approach

The study uses a non-linear ADRL time series econometric model to estimate data from the World Bank and the international country risk guide (1984–2019).

Findings

The study confirms the sand in the wheel and the grabbing hand hypothesis of the impact of control of corruption (CoC) on FDI both in the short and long run. However, degradation on the CoC index has a significant and more than a proportionate constraint on FDI inflows, while an improvement in CoC has no significant impact on improving FDI inflows. An explanation for this outcome was proposed after comparing this finding to a similar prior study with a Nigerian data set (Zangina and Hassan, 2020). The proposed explanation relied mainly on the rational expectation hypothesis and drawing elements of the efficient market hypothesis. FDI inflows do not react to outcomes or trajectories reasonably expected because such rationally expected future outcomes will have been modelled into existing FDI movement decisions. Instead, FDI flows react to “surprises” and often respond in a more than proportional manner.

Practical implications

Political leadership in Ghana should be conscious of the severe adverse effects of inaction or ineffective action in curbing corruption, leading to slippering in CoC rankings. In the case of Ghana, the dependence of FDI on CoC is even more pronounced as the other variables within the specified model show an insignificant impact on FDI. Additionally, admittedly aggregated cross-country data in econometric modelling is appealing and has some empirical basis, but these must not erode the relevance of country-specific studies as both are needed to support theorization.

Originality/value

The paper is among the first to test for the asymmetric relationship between corruption or its control thereof and FDI with a time series approach, and hence, the findings offer new insight.

Details

Journal of Financial Crime, vol. 29 no. 3
Type: Research Article
ISSN: 1359-0790

Keywords

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