Browsing by Author "Chinoda, Tough"

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    Digital financial inclusion and economic growth in Sub-Saharan Africa: the role of institutions and governance
    (Emerald, 2024) Chinoda, Tough; Kapingura, Forget Mingiri
    Purpose – This study examines the role of institutions and governance on the digital financial inclusion and economic growth nexus in Sub-Saharan Africa (SSA) from 2014 to 2020. Design/methodology/approach – This study adopts the generalised method of moments technique which controls for endogeneity. The authors employed four main variables namely, index of digital financial inclusion, gross domestic product per capita growth, institutions and governance. Findings – The results suggest a significant positive effect of institutional quality and governance on the digital financial inclusion-economic growth nexus in SSA. Furthermore, the authors find that effect of trade and population growth on economic growth was significantly positive while inflation reduces economic growth in the region. Research limitations/implications – This study also ignored the effect of digital financial inclusion on environmental quality. Future researches should focus on addressing these drawbacks and replicating the study in Africa as a whole and other developing countries across the world that are experiencing digital financial inclusion and economic growth challenges. The results from the study imply that a positive relationship between digital financial inclusion and economic growth. It is important to note that the study was carried out on the premise that institutions play a pivotal role in enhancing economic growth in SSA. Practical implications – The results confirm the significance of policies that enhances institutional quality and governance which are other avenues the authorities can pursue to enhance economic growth in SSA. Social implications – The paper documents the importance of institutions in boosting economic growth which impacts on social life rather than digital financial inclusion only. Originality/value – The paper makes a contribution through analysing the role of institutions and governance on the digital financial inclusion-economic growth nexus rather than the traditional financial inclusion–economic growth nexus which is common to the majority of the available empirical studies.
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    Fintech-based financial inclusion and banks’ risk-taking: the role of regulation in Sub-Saharan Africa
    (Emerald, 2024-06-06) Chinoda, Tough; Kapingura, Forget Mingiri
    Purpose – The study examines the role of regulation in the fintech-based financial inclusion (FBFI)–risktaking nexus in the Sub-Saharan African (SSA) region. Design/methodology/approach – Using a sample of 10 countries in SSA over the period 2014 to 2021, the study employed the fixed-effect regression model and the two-step generalized method of moments (GMM) estimator. Findings – The results show that FBFI mitigates commercial banks risk-taking in SSA. But as FBFI progresses, the association takes the shape of an inverted U, increasing risks initially and decreasing them later on. Effective supervision and regulatory quality, in particular, are essential in moderating this relationship by offsetting the adverse consequences of FBFI in its early stages. Research limitations/implications – First, while our sample is limited to banks in ten SSA countries, future studies could extend the sample size, enabling more explicit generalization of the results. Second, the FBFI–bank risk nexus can be explored further by comparing diverse forms of fintech participation, such as fintech company investment, fintech technology investment, cooperation with specific fintech service providers and cooperation with Internet giants. Practical implications – Policymakers, banks and fintech companies should collaborate to certify the sustainable utilization of fintech tools to ensure financial inclusion. Policymakers should craft policies that encourage effective supervision and regulatory quality of fintechs since they reduce banks’ risk-taking practices, which usually have positive effect on the economy. Originality/value – The study adds value to the debate on the role of regulation on the FBFI–risk-taking nexus, taking into account countries that are at different levels of development.
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    The Impact of Digital Financial Inclusion and Bank Competition on Bank Stability in Sub-Saharan Africa
    (MDPI, 2023-01-05) Chinoda, Tough; Kapingura, Forget Mingiri; Roman, A. (ed)
    The last few years have witnessed a rapid development in digital finance that may threaten the manner in which traditional financial services are being used. It opens up new opportunities for low-income groups and small businesses that have limited or no access to formal financial services. Thus, digital financial inclusion plays a vital role in boosting a country’s financial inclusion, fulfilling some sustainable development goals and achieving higher economic growth. This study builds on a new measure of digital financial inclusion to examine the impact of digital financial inclusion and bank competition on bank stability in Sub-Saharan Africa for the period 2014 to 2020 using the two-step System Generalised Method of Moments. An index of digital financial inclusion, z-score, Herfindahl–Hirschman Index (HHI), and non-performing loans were used as data variables. The study findings reveal that digital financial inclusion has a significant positive relationship with bank stability (z-score) and a negative relationship with non-performing loans. The study also found a significant negative effect of bank competition (HHI) on bank stability in line with the competition-fragility view. Policymakers should ensure digital financial literacy for all since it feeds into bank stability and also reduces bank insolvency. They should also find ways of enhancing bank competition which reduces non-performing loans and bank insolvency. On practical implications, the study calls for strategic measures to preserve bank stability, such as complementing digital financial inclusion with financial literacy and enhancing bank competition.