Agbloyor, E.Abor, J.Adjasi, C.Yawson, A.2012-08-222012-08-222012Review of Development Finance, 2012; 2(1):32-421879-9337http://hdl.handle.net/2440/72716Recently, economists have started taking a closer look at cross border mergers and acquisitions (M&As) due to its phenomenal rise in the past two decades. This study investigates the relation between banking sector development and cross M&As in Africa. Our sample consists of 11 African countries with data covering the period, 1993-2008. We use a Baltagi panel instrumental variable Error Component Two Stage Least Squares (EC2SLS) estimator with the Baltagi-Chang estimators of the variance components to deal with endogeneity. The results of the study indicate that banking sector development promotes cross border M&A activity in Africa. We also document evidence suggesting that cross border M&A activity drives banking sector development in Africa. Overall, our evidence suggests a two-way causation between banking sector development and cross border M&As. © 2012 Production and hosting by Elsevier B.V.en© 2012 Production and hosting by Elsevier B.V. on behalf of Africagrowth InstituteJournal article002011732110.1016/j.rdf.2012.01.0032-s2.0-8485807996825494Yawson, A. [0000-0002-5000-7871]