This review explores the role of regulatory frameworks in ensuring financial stability in Africa, focusing on a comparative analysis of the banking and insurance sectors. Regulatory frameworks are essential for maintaining the integrity, stability, and efficiency of financial systems. By examining the historical context, development, and current state of both sectors, this review identifies the key regulatory bodies and their respective strategies and objectives. The review highlights the effectiveness of these regulatory frameworks in mitigating risks and enhancing financial stability through case studies of specific African countries, including South Africa, Nigeria, and Kenya. In the banking sector, central banks and financial regulatory authorities enforce regulations aimed at maintaining capital adequacy, managing non-performing loans, and ensuring risk management and compliance. In contrast, the insurance sector's regulatory bodies focus on solvency requirements, risk assessment, and consumer protection. Also underscores the importance of coordination between regulatory bodies to address challenges such as regulatory arbitrage and technological advancements. The comparative review reveals that while both sectors have made significant strides in regulatory development, they face unique challenges and opportunities. The banking sector is grappling with issues of financial inclusion and digital transformation, whereas the insurance sector is striving to improve market penetration and literacy. The review also discusses the impact of regulatory interventions on financial stability, showcasing successful examples from selected countries. The findings suggest that robust regulatory frameworks are critical for fostering sustainable financial stability. Recommendations for enhancing regulatory effectiveness include strengthening coordination among regulatory bodies, enhancing capacity-building, and leveraging technology for better compliance. The review concludes with an outlook on emerging trends in financial regulation and the prospects for maintaining financial stability in Africa, emphasizing the need for continued international cooperation and support. Keywords: Regulatory Frameworks, Financial Stability, Africa, Banking sectors, Review.
Read full abstract