Purpose This study examined the effect of three socioeconomic factors – armed conflicts, income inequality and unemployment, on non-performing loans (NPLs) in sub-Saharan African (SSA). Design/methodology/approach The two-step system generalized method of moments (GMM) is used to analyse the data of 35 SSA countries from 1999 to 2023. Findings The results based on the two-step system GMM estimator reveal that armed conflict, income inequality and unemployment are significant drivers of NPLs in SSA. Practical implications The finding re-enforces the indispensability of socioeconomic factors in the finance and growth debate, and the importance of the efficiency of the financial system as a self-preserving strategy. Social implications Understanding the effect of socioeconomic factors on non-performing loans helps financial system regulators design policies that promote safe and stable financial system. Originality/value This study contributes to the finance and growth debate by extending the drivers of NPLs to socioeconomic factors. It also extends the debate to SSA, a region with prevalent incidences of unemployment, armed conflict and inequality, and scant empirical literature.
Kalu et al. (Fri,) studied this question.