Financial Institution Stability and Investment in Sub-Saharan Africa

Investment is considered a strategy for creating jobs, and reducing poverty in many economies. SSA's financial stability (FS) is still low and cannot be compared to that of the world's industrialized nations. This research proposed to investigate the impact of the financial institution stability (FIS) (bank based stability) on investment in SSA. The study employed pooled mean group autoregressive distribution lag to analyze the data and discovered that both PRI and PBI in SSA cannot be explained by financial stability both in the short and long run at any of the conventional levels of statistical significance. In the long run, variables found to be significant include: EXD, and DS. This suggests that EXD has a negative influence on PRI at the 1% significance level; DS has a positive influence on PRI at the 5% level of significance, indicate that an increase in DS causes PRI to increase. According to the report, financial institutions should strive for capital sufficiency, and regulatory bodies should keep an eye on it. To encourage investment, regulatory bodies should make sure that these institutions' capital base is sufficient to meet their risk profile.