Home

>

Unveiling the Energy Saving Role of Banking Performance in Sub-Sahara Africa

7 May 2018
Publication Type: Policy Brief, Working Paper
JEL Code: G20, Q4, Q40, Q43, Q48

Using a two-step system generalized method of moment (GMM) technique and a panel data for 43 sub-Sahara African countries from 1998 to 2012, this article examines the drivers of energy intensity. Specifically, the article tests two hypotheses: (1) improved banking performance does not foster energy efficiency improvements, and (2) institutional quality (democracy) does not compromise the energy-saving role of improved banking performance. The study uses a unique bank-based data by Andrianova et al. (2015) and different indicators of bank performance- return on asset, asset quality, bank capitalization, managerial inefficiency and financial stability. The paper also constructs a composite bank performance index from these indicators using the principal component analysis. The results reveal that, both in the short and long run, improved banking performance foster energy efficiency improvements in sub-Saharan Africa, but this is compromised by democracy (institutional quality). Thus, to achieve energy efficiency improvements, specific initiatives should be implemented to boost development of the banking sector while also ensuring that democratic governments in the sub-region wean themselves off things that impede the progress of the real sector. More ambitiously, creating a Green Bank may be necessary to stimulate energy efficiency investments in the sub-region.

Working paper 744
1 May 2018
RELATED JOURNAL:

Energy Economics 2018
2 August 2018
SHARE THIS Policy Brief / Working Paper PUBLICATION:

Related South Africa’s Cities and Growth Spatial Challenges and Policy Interventions Content

South Africa’s future will be decided in our cities
Discussion Document 14 South Africa’s cities face multiple, overlap...
Published: 23 June 2023
Discussion Document
Monitoring South Africa’s metropolitan economies: A survey of the data landscape
Discussion Document 13 Disparities in data across different metropo...
Published: 22 May 2023
Discussion Document
Cities, productivity and Jobs in SA: Problems and potential
Discussion Document 12 Cities contribute to national prosperity bec...
Published: 22 May 2023
Discussion Document
Place-based economic policies: international lessons for South Africa
Discussion Document 11 Place-based policies are designed to support...
Published: 22 May 2023
Discussion Document
What luminosity data can and cannot reveal about South Africa’s urban economies
Discussion Document 10 As novel types of data are becoming availabl...
Published: 22 May 2023
Discussion Document
Crime: A policy-oriented survey
Discussion Document 9 South Africa has a reputation for having high...
Published: 22 May 2023
Discussion Document
Virtual CDE Workshop on SA Cities and Growth
Urban economics has provided powerful insights into how the charact...
Published: 12 December 2022
Workshop

Search Resources

Ground Floor Brookside Building
11 Imam Haron Road
Claremont, 7700
Cape Town

PostNet Suite # 109
Private Bag X1005
Claremont 7735
Cape Town

Get Social