DOI: 10.36347/sjebm.2020.v07i08.003

Pages: 240-243

The central focus of this study is to find out how non-performing banking loans affect economic growth in four major African economies since this could help in significant macro and micro policy directions in the countries under consideration. The study employed panel regression analysis and adopted random effect model to find the relationship between the key variables of interest; economic growth (GDP) and Non-performing loans accounting for the heterogeneity that exists among the countries; Ghana, Nigeria, South Africa and Kenya using data from the world bank data catalogue from the period 1999 to 2019. The study established that Non-performing loans (NPL) and Bank Liquidity Reserve to Bank Assets ratio (Banksliq) negatively and significantly affects economic growth however, Inflation negatively affects economic growth but statistically insignificant. The results from this study therefore constitute an important call on policy makers and managers of these economies to adhere strictly to the laws regulating their financial and banking sectors especially on the issues of NPL and Banksliq. The governments and monetary policy authorities in these respective countries must also collaborate actively with the financial sector players to monitor and improve the control of access to the limited investment funds. This is to say that access to investment capital should be based on market principles. Fiscal policy should also be carefully anchored with monetary policy to avoid inflationary pressure since it also exposes borrowers to default risk.