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Does Openness Matter for Financial Development in Africa?, Antonio David, Montfort Mlachila, Ashwin Moheeput

This paper analyzes the links between financial and trade openness and financial development in Sub-Saharan African (SSA) countries. It is based on a panel dataset using methods that tackle slope heterogeneity, cross-sectional dependence and non-stationarity, important econometric problems that are often ignored in the literature. The results do not point to a general direct robust link between trade and capital account openness and financial development in SSA, once we control for other factors such as GDP per capita and inflation. But there is some indication that trade openness is more important for financial development in countries with better institutional quality. The findings might be due to a number of factors including distortions in domestic financial markets, relatively weak institutions and/or poor financial sector supervision. Thus, African policy makers should be cautious about expectations regarding immediate gains for financial development from greater international integration. Such gains are more likely to occur through indirect channels
Table Of Contents
Cover; Abstract; Contents; I. Introduction; Figures; 1. SSA Composite Financial Development Index; II. Openness and Financial Development-An Overview of the Literature; III. The Data; 2. Financial Sector Development Indices for Selected Regions; 3. Private Credit to GDP; 4. Financial Reform Index; IV. Modeling Approach; 5. Sub-Saharan Africa: Scatter Plots of the Relationships between Financial Development and Measures of Openness; V. Empirical Results; Tables; 1. Estimation Results for Variables in Levels; 2. Estimation Results for Variables in First Differences
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (39 p.)
Specific Material Designation
Form Of Item

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