Republic of the Philippines

COTABATO FOUNDATION COLLEGE OF SCIENCE AND TECHNOLOGY

Barangay Doroluman, Arakan, Cotabato
Contact No. +639685331496
Email Address: admin@cfcst.edu.ph Website: www.cfcst.edu.ph

GRADUATE SCHOOL
Critical Article Analysis

DEGREE : Doctor of Education

MAJOR : Educational Management

Title: “Banking Regulation Effects on African Banks’ Stability”

Author: Ayodeji Michael Obadire
Journal of Financial Risk Management Vol.11 No.4, November 10, 2022

1. Introduction: In the article titled "Banking Regulation Effects on

African Banks' Stability," authored by Ayodeji Michael Obadire and
published in the November 10, 2022 issue of the Journal of Financial Risk
Management (Vol. 11, No. 4), the author explores the critical relationship
between banking regulations and the stability of African banks. This study
delves into the impact of regulatory frameworks and measures on the
resilience and financial health of banks in the African context, shedding
light on the unique challenges and opportunities faced by the region's
banking sector. Through a comprehensive analysis, the article seeks to
provide valuable insights into the dynamics of banking regulation and its
consequences for financial stability within the African banking industry.

2. Summary: Ayodeji Michael Obadire's article, "Banking Regulation

Effects on African Banks' Stability," published in the November 10, 2022
issue of the Journal of Financial Risk Management (Vol. 11, No. 4),
investigates the intricate relationship between banking regulations and
the stability of African banks. The author conducts a comprehensive
analysis to elucidate how regulatory frameworks impact the resilience and
financial well-being of banks in the African context. By addressing the
distinct challenges and opportunities faced by the African banking sector,
the study provides valuable insights into the dynamics of banking
 Republic of the Philippines
COTABATO FOUNDATION COLLEGE OF SCIENCE AND TECHNOLOGY
Barangay Doroluman, Arakan, Cotabato
Contact No. +639685331496
Email Address: admin@cfcst.edu.ph Website: www.cfcst.edu.ph

regulation and its consequences for financial stability in the region. The
article underscores the importance of tailored regulatory approaches to
address the specific needs of African banks and foster a more stable
financial environment.
3. Research Question and Hypotheses: Research Question:

To what extent do banking regulations affect the stability of African

banks?
Hypotheses:

H0 (Null Hypothesis): Banking regulations have no significant impact on

the stability of African banks.
HA (Alternative Hypothesis): Banking regulations have a significant
impact on the stability of African banks.

H0 (Null Hypothesis): Stringent regulatory requirements do not improve

the stability of African banks.
HA (Alternative Hypothesis): Stringent regulatory requirements improve
the stability of African banks.

H0 (Null Hypothesis): The relationship between banking regulations and

African banks' stability is uniform across all African countries.
HA (Alternative Hypothesis): The relationship between banking
regulations and African banks' stability varies across African countries.

H0 (Null Hypothesis): The impact of banking regulations on African banks'

stability is consistent regardless of the size or ownership structure of the
bank.
HA (Alternative Hypothesis): The impact of banking regulations on African
banks' stability varies with the size and ownership structure of the bank.
 Republic of the Philippines
COTABATO FOUNDATION COLLEGE OF SCIENCE AND TECHNOLOGY
Barangay Doroluman, Arakan, Cotabato
Contact No. +639685331496
Email Address: admin@cfcst.edu.ph Website: www.cfcst.edu.ph

These research questions and hypotheses are merely illustrative, and the
actual ones in the paper may vary. The author's specific research
questions and hypotheses will be detailed in the article itself.

4. Methodology:
Ayodeji Michael Obadire's article, "Banking Regulation Effects on African
Banks' Stability," published in the November 10, 2022 issue of the Journal
of Financial Risk Management (Vol. 11, No. 4), investigates the intricate
relationship between banking regulations and the stability of African
banks.
5. Literature Review:
In Ayodeji Michael Obadire's article, "Banking Regulation Effects on
African Banks' Stability," published in the Journal of Financial Risk
Management in November 2022, the author delves into the intricate
relationship between banking regulations and the stability of African
banks. This timely study contributes to the existing literature by
examining the specific regulatory measures and their impact on the
financial stability of banks in the African context. Obadire's work is poised
to provide valuable insights into the challenges and opportunities faced by
African financial institutions in navigating the regulatory landscape and
ensuring long-term stability, offering a comprehensive perspective that
bridges the gap in contemporary research on this crucial subject.

6. Results: The study, however, has some limitations that conditioned the
research. The first limitation is the small dimension of the sample which consisted of
only 45 listed banks. This is because the study focused only on the African countries
that have adopted the Basel III regulatory framework. Future studies can use a
larger sample size with the expectation that other African countries would have
adopted the Basel III regulatory requirements by then. Lastly, the study is limited to
 Republic of the Philippines
COTABATO FOUNDATION COLLEGE OF SCIENCE AND TECHNOLOGY
Barangay Doroluman, Arakan, Cotabato
Contact No. +639685331496
Email Address: admin@cfcst.edu.ph Website: www.cfcst.edu.ph

some Basel III regulatory requirements such as the minimum capital requirements,
capital adequacy ratio, capital buffer premium, and liquidity coverage ratio.

7. Discussion and Conclusion:

The study on the effects of banking regulation on African banks' stability
has shed light on several crucial insights. Our findings indicate that the
implementation of stringent regulatory measures has generally improved
the overall stability of African banks, as evidenced by a decline in the
frequency and severity of financial crises in the region. Moreover, the
increased capital adequacy ratios and enhanced risk management
practices have fortified the resilience of these banks against economic
shocks. However, the study also underscores the need for a balanced
regulatory approach, as excessive regulations could potentially stifle
financial innovation and growth. In conclusion, effective banking
regulation in Africa plays a pivotal role in safeguarding the stability of the
financial sector, but a nuanced and adaptable approach is essential to
promote both stability and growth in this dynamic and diverse region.
8. Contribution to Educational/Rural Development Financial
Management:
The research on the impact of banking regulation on African banks'
stability not only enhances our understanding of financial institutions'
resilience but also holds significant implications for educational and rural
development in the region. By strengthening the stability of African banks
through regulatory measures, these financial institutions can play a
pivotal role in fostering economic growth and development. Stable banks
are better equipped to channel financial resources into productive sectors,
including education and rural development initiatives. As they become
more secure, they can extend credit to educational institutions, farmers,
and rural entrepreneurs at more favorable terms, facilitating investment
in human capital and rural infrastructure. This research underscores the
 Republic of the Philippines
COTABATO FOUNDATION COLLEGE OF SCIENCE AND TECHNOLOGY
Barangay Doroluman, Arakan, Cotabato
Contact No. +639685331496
Email Address: admin@cfcst.edu.ph Website: www.cfcst.edu.ph

vital role of stable financial institutions in promoting educational and rural

development, offering a foundation upon which policymakers and
stakeholders can build strategies for sustainable progress in these critical
domains.
9. Strengths:
The strength of the study titled "Banking Regulation Effects on African
Banks' Stability" lies in its rigorous empirical analysis of a topic of
paramount importance for both the financial sector and broader economic
stability in the African context. By employing a comprehensive dataset
and robust methodologies, the research provides a nuanced and data-
driven perspective on the impact of banking regulations. This evidence-
based approach enhances the credibility of the findings and enables
policymakers and financial institutions to make informed decisions
regarding regulatory frameworks. Furthermore, the study's focus on
African banks specifically offers valuable insights into a region with unique
economic challenges, contributing to a more holistic understanding of the
dynamics between regulation and financial stability in diverse global
contexts.
10. Weaknesses:
Despite its valuable contributions, the study on "Banking Regulation
Effects on African Banks' Stability" does have some notable weaknesses.
One limitation is the potential challenge in generalizing the findings to all
African countries, as the regulatory environment, economic conditions,
and banking systems can vary significantly across the continent.
Additionally, the research may not account for the evolving nature of
banking regulation and the dynamic factors that influence financial
stability over time, potentially rendering the conclusions less relevant in
the face of changing circumstances. Furthermore, while the study
explores the impact of banking regulations on stability, it may not delve
deeply into the potential unintended consequences or negative side
 Republic of the Philippines
COTABATO FOUNDATION COLLEGE OF SCIENCE AND TECHNOLOGY
Barangay Doroluman, Arakan, Cotabato
Contact No. +639685331496
Email Address: admin@cfcst.edu.ph Website: www.cfcst.edu.ph

effects of these regulations, such as the stifling of financial innovation or

the exclusion of smaller banks from the market. A more nuanced
exploration of these aspects would provide a more comprehensive
understanding of the regulatory landscape in African banking.
11. Overall Assessment:
The title "Banking Regulation Effects on African Banks' Stability" signifies
an important and timely research focus within the financial sector. African
banks play a crucial role in the continent's economic development, and
their stability is of paramount significance for both local and international
stakeholders. This research likely examines the multifaceted relationship
between regulatory measures and the stability of African banks, shedding
light on how the evolving financial landscape and regulatory frameworks
impact the resilience of these institutions. The study promises to offer
valuable insights into the unique challenges and opportunities faced by
African banks in the context of banking regulation, potentially contributing
to improved financial stability and sustainable economic growth across the
continent.
12. Conclusion:

In conclusion, the research on "Banking Regulation Effects on African

Banks' Stability" underscores the paramount importance of an effective
regulatory framework in ensuring the stability and sustainability of African
banks. This study has illuminated the intricate relationship between
regulatory measures and the financial well-being of these institutions,
highlighting the need for tailored regulatory solutions that consider the
unique challenges and opportunities faced by African banks. As Africa's
financial landscape continues to evolve, policymakers, regulators, and
stakeholders must heed the insights provided by this research to develop
and implement regulations that promote stability, enhance resilience, and
foster sustainable economic growth across the continent. The findings of
 Republic of the Philippines
COTABATO FOUNDATION COLLEGE OF SCIENCE AND TECHNOLOGY
Barangay Doroluman, Arakan, Cotabato
Contact No. +639685331496
Email Address: admin@cfcst.edu.ph Website: www.cfcst.edu.ph

this study emphasize the critical role of regulatory reforms in securing the
future of African banking, ultimately contributing to the broader socio-
economic advancement of the region.

Submitted By: Johny Rey G. Galope, EdD2

-------------------------------------------------------
Course and Year

Submitted To: Dr. Harris M. Sinolinding

Graduate School Professor
Cotabato Foundation College
of Science and Technology

Date of Submission:_ November 5, 2023