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Linkages between financial development, financial instability, financial liberalisation and economic growth in Africa

Michael Batuo, Kupukile Mlambo and Simplice Asongu ()

Research in International Business and Finance, 2018, vol. 45, issue C, 168-179

Abstract: In the aftermath of the 2008 global financial crisis, the implications of financial liberalisation for stability and economic growth have come under increased scrutiny. One strand of literature posits a positive relationship between financial liberalisation and economic growth and development. However, others emphasise the link between financial liberalisation is intrinsically associated with financial instability which may be harmful to economic growth and development. This study assesses linkages between financial instability, financial liberalisation, financial development and economic growth in 41 African countries for the period 1985–2010. The results suggest that financial development and financial liberalisation have positive effects on financial instability. The findings also reveal that economic growth reduces financial instability and the magnitude of reduction is higher in the pre-liberalisation period compared to post-liberalisation period.

Keywords: Economic growth; Financial development; Trade; Financial instability and Africa (search for similar items in EconPapers)
JEL-codes: O16 O47 G23 O55 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Linkages between financial development, financial instability, financial liberalisation and economic growth in Africa (2017) Downloads
Working Paper: Linkages between financial development, financial instability, financial liberalisation and economic growth in Africa (2017) Downloads
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