EconPapers    
Economics at your fingertips  
 

International Financial Integration, Investment and Economic Performance in Sub-Saharan African Countries

Abdullahi Ahmed

Global Economy Journal, 2011, vol. 11, issue 4, 1-28

Abstract: This paper examines the issues of international and regional financial integration and its impact taking a sample 25 SSA countries. The research tests both the direct and indirect channels through which the impact of financial integration works and is transmitted to the real economy. Directly, it is argued that financial openness affects economic growth through enabling access to foreign financial markets, increasing financial service efficiency and helping in diversification of risks and consumption smoothing. Thus while inducing additional capital investment, it also fosters macroeconomic discipline. Indirectly, the process of international financial integration facilitates the transfer of technological know-how, promotes trade and enhances specialization.While financial openness of recent years has laid a strong foundation to consolidate financial integration between regions and with international financial markets, we do not observe a robust link between financial openness and economic growth in SSA region. The empirical analysis considers the possibility of a positive indirect effect, and we report evidence in favour of the indirect transmission root. From our results, we observe a positive and statistically significant association between international financial integration and financial development under all its selected indicators. This finding suggests that financial capital market integration aids growth indirectly through promoting domestic financial markets. The study reports evidence suggesting that good institutions, higher level of human capital, and stable macroeconomic environment play an important role in mitigating the negative impacts of international financial openness.

Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed

Downloads: (external link)
https://www.degruyter.com/view/j/gej.2011.11.issue ... .1712.xml?format=INT (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:glecon:v:11:y:2011:i:4:n:5

Ordering information: This journal article can be ordered from
https://www.degruyter.com/view/j/gej

Access Statistics for this article

Global Economy Journal is currently edited by Jannett Highfill

More articles in Global Economy Journal from De Gruyter
Bibliographic data for series maintained by Peter Golla ().

 
Page updated 2020-07-08
Handle: RePEc:bpj:glecon:v:11:y:2011:i:4:n:5