Fith Issue is coming. Banking Secotr Stability in Sierra Leone: An Econometric Analysis

Fith Issue is coming. Banking Secotr Stability in Sierra Leone: An Econometric Analysis

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Banking Sector Stability in Sierra Leone: An Econometric Analysis

Author: Leroy Jhonson*

Abstract

This study assesses banking sector stability in Sierra Leone using quarterly data over the period 2009-2019 of the fourteen banks in the sector. The study is carried out in the context of Johansen Cointegration estimation technique and it is found out that in the long run, total bank assets, gross loans positively influence banking sector stability whilst exchange rate had negative effect on banking sector stability. In the short run, total-banking assets is also found to have a positive and statistically significant relationship on banking sector stability. To safeguard soundness and stability of the banking sector, policies that strengthen banking sector, boost capital adequacy level, deepen financial markets in the sector, should be pursued by the monetary authority. This is turn will facilitate smooth banking operations and fortify public confidence in the banking sector.

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