When support for African banks leads to a slowdown in their credit supply
Research focus
Florian Léon
Research Officer, FERDI
Associate researcher, CERDI-UCA-CNRS-IRD
Access to finance remains a major obstacle for small and medium-sized enterprises (SMEs) in Africa, limiting their growth and job creation. To address this, programs have been implemented to encourage banks to increase their credit supply to SMEs. However, evaluations of the impact of these programs are scarce. Our study examines this issue, utilizing a novel database that compiles programs financed by development finance institutions in Africa. The results reveal an unexpected effect: supported banks experienced an 8% reduction in their lending activity.
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Article reference
Léon, F. (2025). Blended Binds: How DFI's Support Programs Stifle Bank Lending in Africa, World Development, 191, 106998.
Bibliographical references
- Amamou, R., Gereben, A. & Wolski, M. (2023). Assessing the impact of the EIB’s intermediated lending to SMEs during funding shocks. Small Business Economics, 60 (3), 975-1007.
- Aydin, H., Bircan, C., & De Haas, R. (2024). Blended finance and female entrepreneurship. CEPR Discussion Papers, 18761, 1-69.
- Léon, F. (2025). Blended binds: How DFI’s support programs stifle bank lending in Africa. World Development, 191, 106998.
Cover picture © IRD - Xavier Le Roy