Banking and financial regulation in Sub-Saharan Africa: a systematic literature review and multiple regression approach

Purpose A functional financial sector is a major driver of economic development. The purpose of this paper is to provide a comprehensive understanding of existing research findings, gaps in knowledge and emerging trends in the field of banking and finance. Design/methodology/approach By conducting a systematic literature review, a total of 98 peer-reviewed articles whose focus and relevance match with the subject matter were reviewed and synthesised to answer the research questions. Multiple regression was also carried to investigate the relationship amongst the identified probable factors affecting financial inclusions. Findings The outcome of this study highlighted some factors mitigating the growth of the banking sector in the Sub-Saharan Africa (SSA). These include excessive or stringent regulations, market segmentation, high interest rates, information asymmetry, low credit status and uneven distribution of credit amongst others. Practical implications Some of the policy recommendations that could aid the development of the banking sector in SSA include: development and deepening of interbank markets, financial inclusion, improvement of overall market efficiency through redistribution of liquidity within the banking system, improvement of price and encouragement of competition. This study recommends financial inclusion by formulating policies that balances the capital adequacy requirements with the risk of insolvency to ensure credit flows and promotes financial stability via effective operations financial institutions. Originality/value This study contributes valuable insights to the understanding of banking and financial regulations in SSA, informing both academic research and policy development in the region.