Financial openness, trade openness and financial development: Evidence from sub-Saharan Africa

Witness Bandura

Development Southern Africa, 2022, vol. 39, issue 6, 947-959

Abstract: The study investigates the impact of financial openness (de facto) and trade openness on financial development for 26 sub-Saharan African countries over the period 1982–2016. A system Generalized Method of Moments methodological approach is utilised with 5-year averaged data. There is no evidence of the combined/joint impact of trade and financial openness towards financial development which disproves the existence of openness hypothesis by Rajan and Zingales [(2003). The great reversals: the politics of financial development in the twentieth century. Journal of Financial Economics 69(1), 5–50]. Comparatively, the region shows that it can positively benefit from trade openness to financial openness. Even though trade openness shows weak positive impact on financial development, the results are not robust, as they vary from one model to the other. Institutions show positive contribution towards financial development, but the impact is only significant towards private credit by banks. It is recommended that the institutional quality in the region be improved so that the region could fully benefit from international business, largely through investor protection.

Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/0376835X.2021.1988517 (text/html)
Access to full text is restricted to subscribers.

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:taf:deveza:v:39:y:2022:i:6:p:947-959

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CDSA20

DOI: 10.1080/0376835X.2021.1988517

Access Statistics for this article

Development Southern Africa is currently edited by Marie Kirsten

More articles in Development Southern Africa from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().