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The relationship between an economy's financial sector and the occurrence and resolution of conflict may at first sight appear tenuous. Banking systems, financial regulation and currency arrangements do not appear to be relevant in understanding why nations collapse or why people kill each other. However, the linkages between the financial sector and issues of conflict are closer than one might expect. Narrow development—development that fails to reduce poverty and which exacerbates initial inequalities—is an important cause of conflict (but, needless to say, not the only one). Narrow development must be financed—and it is financed in ways that increase poverty and inequality and raise a society's propensity to violent conflict. During conflict, finance (both internal and external) can be decisive in determining who wins, as well as the duration of war. Rebuilding the financial system is important to reconstruction from war, since otherwise private investment is constrained. But ‘post-conflict’ economies generally have weak regulatory authorities, and the financial system may be flooded with unsound loans, leading to economic problems that can endanger economic recovery and therefore peace. – aid ; conflict ; financial development ; sub-Saharan Africa

War provides economic opportunities, such as the capture of valuable natural resources, that are unavailable in peacetime. However, belligerents may prefer low-intensity conflict to total war when the former has a greater pay-off. The paper therefore uses a two-actor model to capture the continuum from total war to complete peace that often characterises Africa's conflicts. This is in contrast to the existing literature with its focus on mutually exclusive states of total war or complete peace, an assumption which is more relevant to Europe's inter-state wars than to Africa's civil wars. The paper also discusses changes in the economic incentives of belligerents that may induce peaceful behaviour. – aid ; conflict ; natural resources ; sub-Saharan Africa

Corruption is endogenous to many political structures and serves key functions beyond the self-interest of public officials and politicians. Like violence, corruption participates in political ordering and, although corruption may in itself play a corrosive role on economies and rule-based institutions, it forms part of the fabric of social relations. This endogenous character means that conflicts may arise more from changes in the pattern of corruption, than from corruption itself. Domestic or external shocks affecting this pattern may lead to open conflicts reducing corruption. Yet, in a context of dwindling public rents and weak institutions, conflicts can degenerate into even further illegitimate and predatory rule characterized by a shift from monopolistic forms of corruption to criminal and competitive ones. Such pattern of corruption frequently ‘fuels’ violent conflicts. Controversially, a move towards peace might be ‘paying’ for it by facilitating the emergence of a corrupt order. Acknowledging the negative long-term effects of such policy, the challenge of peace-building initiatives and reforms is therefore to progressively shift individual incentives from competition over immediate corrupt gains towards broadly rewarding relations of benevolence and justice. – conflict ; corruption ; structural change