What the study found
The study found that higher credit risk is associated with liquidity hoarding in African banks. In this context, liquidity hoarding means banks shift toward more liquid assets and reduce off-balance sheet exposures. The authors also report that corruption control reduces this response, while global uncertainty increases it.
Why the authors say this matters
The authors conclude that the findings have policy implications for credit risk management, institutional reform, and targeted SME financing. They say these measures are important for supporting financial intermediation and sustainable economic growth in emerging and developing markets.
What the researchers tested
The researchers examined whether credit risk drives liquidity hoarding in African banks, and whether institutional quality and global uncertainty change that relationship. They used a fixed-effects panel model on an unbalanced panel of 474 commercial banks across 47 African countries from 2013 to 2022. They also checked robustness with a two-step system GMM estimator, bank-size subsamples, and alternative proxies.
What worked and what didn't
The authors report that rising credit risk was linked to banks reallocating assets toward liquid instruments and scaling back off-balance sheet exposures. They also found that stronger corruption control attenuated this risk-averse behavior, while global uncertainty amplified it. No contrary result is described in the abstract.
What to keep in mind
The abstract does not describe detailed limitations beyond noting the use of robustness checks for potential endogeneity concerns. The study covers commercial banks in 47 African countries over 2013 to 2022, so its scope is limited to that sample and period.
Key points
- Higher credit risk is associated with liquidity hoarding in African banks.
- Liquidity hoarding is described as shifting assets toward liquid instruments and reducing off-balance sheet exposures.
- Stronger corruption control weakens the credit-risk response.
- Global uncertainty strengthens the credit-risk response.
- The study uses data from 474 commercial banks in 47 African countries from 2013 to 2022.
Disclosure
- Research title:
- Credit risk increases liquidity hoarding in African banks
- Authors:
- Anas Alaoui Mdaghri, Abdessamad Raghibi, Abdelhamid Ait Bihi
- Institutions:
- Université Ibn Zohr, Université Ibn Zohr, Université Ibn Zohr
- Publication date:
- 2026-02-24
- OpenAlex record:
- View
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