Intervening role of socioeconomic factors in the loan performance and growth nexus in SSA countries.

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.

Keywords: Non-performing loans, Unemployment, Inequality, Conflict intensity, Sub-Saharan Africa, B26, E24, D63, D74, N17