Doctoral research: New research on access to finance and firm growth in Sub-Saharan Africa

Dr. Lawrence Ngalim, who recently graduated from our Finance and Banking doctoral program, and his advisor Dr. Aslı Togan published an article titled “Colonialism, Access to Finance, and Firm Growth in Sub-Saharan Africa” in the Emerging Markets Review journal. The article focuses on the question of whether adequate access to external finance is important for firm growth. The authors use two instruments built on Africa’s colonial history to explain the current variations in financial development across Sub-Saharan African economies. These tools—the firm’s distance from a colonial train station and whether it is located in an area with colonial settlements—are used to determine the current effects of access to finance on firm growth across Sub-Saharan Africa. The results emphasize the priority of access to finance in firm growth and consistently show that firms with access to finance are more likely to experience higher revenue growth and asset growth. The findings offer policy implications for the development of the banking sector as well as the private sector.