Politics, finance and growth

c. Steve Evans

c. Steve Evans

Dr Svetlana Andrianova, University of Leicester

Start: Sep 2012 |  End: Mar 2016

Project webpage
Research Councils UK project page

Although the recent financial crisis led to suggestions that there can be too much finance, many Low Income Countries (LICs)  remain financially under-developed.  In Sub-Saharan Africa, banks continue to lend little domestically, and even where financial development has taken place, its effects on the poor are generally unknown. By analysing the linkages between politics, finance and growth in Sub-Saharan Africa, this project aims to explain how finance can help promote pro-poor economic growth in LICs.

The project seeks to analyse the causes of financial under-development. It will use appropriate methods and data focusing on:

  • determinants of high loan default in Sub-Saharan Africa;
  • the role of incumbent financiers in deterring new firms’ entry;
  • the role of natural resources on financial development.

It also aims to re-examine key aspects of the finance-growth relationship by analysing the consequences of banks’ opportunistic behaviour on financial instability, and the effect of different types of financial reforms on bank soundness. A new measure of banking fragility constructed under the project will help determine if increased fragility explains the recent weakening of the finance-growth relationship.