A study into the links between mortgage financing and economic development in Africa

Purpose -The purpose of this paper is to explore the link between mortgage financing and economic development for African countries, as there is a gap in the literature regarding this topic. The development of mortgage markets is important for the overall development of a country. Policymakers and international institutions like the World Bank have been promoting the expansion of Africa's nascent mortgage markets as a logical stimulus to economic growth and development. Specifically, the authors analyze the link between the size of the mortgage market and the gross national income ( GNI) per capita for African countries. They found a significant positive correlation between the size of the mortgage market and GNI per capita. A plausible interpretation is that mortgage financing can induce growth and development. Design/methodology/approach -The authors examine the relationship between mortgage financing and GNI per capita for African countries using the hedonic framework. Findings -The authors found a significant positive correlation between the size of the mortgage market and the level of GNI per capita, as hypothesized for this study. Practical implications -An economically plausible interpretation is that the availability of mortgage financing leads to a more efficient financial system, which, in turn, produces growth and development. Social implications -These findings provide empirical support for the need to pay greater attention to further development and expansion of the emergent mortgage markets of African economies. Originality/value -There is a gap in the empirical literature regarding this topic with reference to the link between mortgage financing and economic development for African countries.