How do financial inclusion and bank stability explain agricultural productivity in Sub-Saharan Africa?

Abstract

PurposeThis study aims to examine the impact of financial inclusion and bank stability on agricultural productivity in Sub-Saharan Africa (SSA).Design/methodology/approachThe study used 38 countries in the SSA with data spanning between 2004 and 2021. The data were analyzed using the two-step system generalized method of moments (GMM) and the panel-corrected standard error (PCSE) model.FindingsThe study found a positive effect of financial inclusion and bank stability on agricultural productivity. The study also discovered that while the access component of financial inclusion has a negative influence on agricultural productivity, the usage dimension has a positive impact.Research limitations/implicationsThe study suggests to policymakers that an inclusive and stable financial system improves agricultural productivity. The findings recommend that policymakers should empower farmers to leverage financial inclusion.Originality/valueThis study provides insightful discussion on the impact of financial inclusion and its various dimensions and bank stability on agricultural productivity in SSA.