Ethnic Fractionalization, Governance and Loan Defaults in Africa

Svetlana Andrianova, Badi H. Baltagi, Panicos Demetriades, David Fielding

Research output: Contribution to journalArticlepeer-review

4 Scopus citations


We present a theoretical model of an imperfectly competitive loans market that is suitable for emerging economies in Africa. The model allows for variation in both the level of contract enforcement (the quality of governance) and the degree of market segmentation (the level of ethnic fractionalization). The model predicts a specific form of nonlinearity in the effects of these variables on loan default. Empirical analysis using African panel data for 110 individual banks in 28 countries over 2000–08 provides strong evidence for these predictions. Our results have important implications for the conditions under which policy reform will enhance financial development.

Original languageEnglish (US)
Pages (from-to)435-462
Number of pages28
JournalOxford Bulletin of Economics and Statistics
Issue number4
StatePublished - Aug 2017

ASJC Scopus subject areas

  • Statistics and Probability
  • Social Sciences (miscellaneous)
  • Economics and Econometrics
  • Statistics, Probability and Uncertainty


Dive into the research topics of 'Ethnic Fractionalization, Governance and Loan Defaults in Africa'. Together they form a unique fingerprint.

Cite this