An Analysis of Bank Competiveness, Financial Intermediation and Entrepreneurship Development in African Economies

Abstract

Given probable nexus between financial intermediation and entrepreneurship development, this paper uses multivariate regression techniques to test the impact of bank competitiveness on the nexus in forty-two African economies. With data obtained from the World Development Indicators, the results reveal that lending rates, the proxy for financial intermediation positively impacts business start-up-cost, the proxy for entrepreneurship, while bank competitiveness negatively impacts business start-up-cost, which suggests that banking competitiveness has the capacity to improve entrepreneurship in African economies. The region’s economies should reduce monetary base rates to single digit; advanced liberalization of the financial industry; encourage stronger competition through digital finance; lessen the requirements for new conventional bank entry; provide fiscal support for increased bank branching