Effect of financial development on mortgage financing in Africa: an application of sampling splitting estimation approach

Using 10 countries' data set spanning from 1995 to 2018, we examined the non-linearity existing between financial development and mortgage financing in Africa. We invoke the Hansen (2000. "Sample Splitting and Threshold Estimation." Econometrica 68 (3): 575-603. doi:10.1111/1468-0262. 00124.) sample-splitting estimation approach. We observed that more financial development (private credit) impedes mortgage finance when measured against construction but enhanced when measured against GFCF. The same effect is present when domestic credit is used against construction. With GFCF, countries must operate above the threshold point to gain maximum advantage while with Broad money, spending below the threshold estimate is good for mortgage financing. Trade also has positive effect on mortgage finance as this will help the continent's mortgage development given member countries decisions to adopt the continental free trade policy. This further indicates that, countries involved should work in order not to exceed the threshold point estimate as operating above the threshold would become disincentive for mortgage financing on the continent.