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<p>This study examines whether Public Development Banks (PDBs) generate additionality to financial regulation for agricultural innovation in Sub-Saharan Africa (SSA). Using a two-way fixed-effects (TWFE) panel of 37 SSA countries over 2000–2022 (N = 490), we construct a novel PDB Intensity Index capturing institutional existence, financial scale, maturity, and operational performance, drawing from the INSE-Peking/AFD database (2025 Q3 release), and estimate conditional associations between PDB intensity, financial regulatory quality, and a multidimensional Agricultural Innovation Index (AII). Our results provide no evidence of financial additionality from PDBs. Across specifications, PDB intensity is not significantly associated with agricultural innovation outcomes, while financial regulatory quality emerges as a robust and positive predictor (β ≈ 0.061, <i>p</i> &lt; 0.05). Interaction models further indicate no complementarity between PDBs and regulatory quality. To address potential identification concerns, we implement the Callaway and Sant’Anna [25] Difference-In-Differences estimator. The results yield a marginally negative aggregate treatment effect (ATT = − 0.171, <i>p</i> = 0.091) and do not reject parallel pre-trends, reinforcing the null on financial additionality. Event-study estimates reveal no consistent dynamic gains following PDB establishment. To explore underlying mechanisms, we complement the analysis with a PLS-SEM framework. The results suggest that agricultural innovation is primarily driven by infrastructural factors such as connectivity, access to electricity, and irrigated land that reduce adoption costs and facilitate coordination. Institutional quality positively affects financial regulation, which in turn promotes innovation. However, PDB intensity exhibits a negative direct effect on financial regulatory quality (β = − 0.118, <i>p</i> &lt; 0.001) and a negative indirect effect on innovation (β = − 0.065, <i>p</i> &lt; 0.01), pointing to a potential regulatory capture or supervisory crowding-out mechanisms. These results suggest that institutional additionality may operate conditionally on pre-existing regulatory capacity and identify a transmission mechanism warranting further investigation. Policy implications point to the primacy of regulatory quality-building over credit expansion as a prerequisite for effective PDB-led agricultural innovation in SSA.</p>

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Do Public Development Banks add value to financial regulation for agricultural innovation in Sub Saharan Africa

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2026年7月7日

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  • Ndam Nji Nfout Assana,
  • Nourou Mohammadou

摘要

This study examines whether Public Development Banks (PDBs) generate additionality to financial regulation for agricultural innovation in Sub-Saharan Africa (SSA). Using a two-way fixed-effects (TWFE) panel of 37 SSA countries over 2000–2022 (N = 490), we construct a novel PDB Intensity Index capturing institutional existence, financial scale, maturity, and operational performance, drawing from the INSE-Peking/AFD database (2025 Q3 release), and estimate conditional associations between PDB intensity, financial regulatory quality, and a multidimensional Agricultural Innovation Index (AII). Our results provide no evidence of financial additionality from PDBs. Across specifications, PDB intensity is not significantly associated with agricultural innovation outcomes, while financial regulatory quality emerges as a robust and positive predictor (β ≈ 0.061, p < 0.05). Interaction models further indicate no complementarity between PDBs and regulatory quality. To address potential identification concerns, we implement the Callaway and Sant’Anna [25] Difference-In-Differences estimator. The results yield a marginally negative aggregate treatment effect (ATT = − 0.171, p = 0.091) and do not reject parallel pre-trends, reinforcing the null on financial additionality. Event-study estimates reveal no consistent dynamic gains following PDB establishment. To explore underlying mechanisms, we complement the analysis with a PLS-SEM framework. The results suggest that agricultural innovation is primarily driven by infrastructural factors such as connectivity, access to electricity, and irrigated land that reduce adoption costs and facilitate coordination. Institutional quality positively affects financial regulation, which in turn promotes innovation. However, PDB intensity exhibits a negative direct effect on financial regulatory quality (β = − 0.118, p < 0.001) and a negative indirect effect on innovation (β = − 0.065, p < 0.01), pointing to a potential regulatory capture or supervisory crowding-out mechanisms. These results suggest that institutional additionality may operate conditionally on pre-existing regulatory capacity and identify a transmission mechanism warranting further investigation. Policy implications point to the primacy of regulatory quality-building over credit expansion as a prerequisite for effective PDB-led agricultural innovation in SSA.