The Impact of Inflation on Financial Sector Performance: A Case Study of Sub-Saharan Africa

Authors

  •   Apanisile Olumuyiwa Tolulope Assistant Lecturer, Economics Department, Obafemi Awolowo University, Ile-Ife
  •   Oyelami Lukman Oyeyinka Assistant Lecturer, Economics Department, Wesley University of Science and Technology, Ondo State

DOI:

https://doi.org/10.17010/ijf/2014/v8i1/71983

Keywords:

Inflation

, Financial Sector, Anticipated Inflation, Unanticipated Inflation, Economic Performance

E31

, E37, G2

Paper Submission Date

, July 29, 2013, Paper sent back for Revision, September 10, Paper Acceptance Date, September 30, 2013.

Abstract

The study investigates the impact of inflation on financial sector performance in the sub-Saharan African region. To this end, dynamic panel data was employed, and the cross section covers 45 countries in the region between the period from 1980 - 2011. Three measures of financial sector performance (domestic credit to private sector, liquidity ratio, and market capitalization) were used for the study. Inflation was disaggregated to anticipated and unanticipated inflation, and the results show that both anticipated and unanticipated inflation have a negative effect on the financial sector performance, especially on the activities of the banking sector. The study, therefore, concludes that high inflation rate is inimical to financial sector performance, irrespective of the economy involved, and the government should employ necessary measures to control inflation as a way of improving the performance of the financial sector.

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Published

2014-01-01

How to Cite

Tolulope, A. O., & Oyeyinka, O. L. (2014). The Impact of Inflation on Financial Sector Performance: A Case Study of Sub-Saharan Africa. Indian Journal of Finance, 8(1), 43–50. https://doi.org/10.17010/ijf/2014/v8i1/71983

Issue

Volume 8, Issue 1, January 2014

Section

Articles
Crossref
Scopus
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Europe PMC

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