The African Financial Development Gap

Franklin Allen, Elena Carletti (), Robert Cull, Jun "QJ" Qian and Lemma Senbet

No ECO2010/24, Economics Working Papers from European University Institute

Abstract: Economic growth in Africa has long been disappointing. We document that the financial sectors of most sub-Saharan African countries remain significantly underdeveloped by the standards of other developing countries. We examine the factors that are associated with financial development in Africa and compare them with those in other developing countries. Population density appears to be considerably more important for banking sector development in Africa than elsewhere. Given the high costs of developing viable banking sectors outside metropolitan areas, technology advances, such as mobile banking, could be a promising way to facilitate African financial development. Similarly to other developing countries, natural resources endowment is associated with a lower level of financial development in Africa, but macro policies do not appear to be an important determinant.

Keywords: Africa; finance and growth; banks; institutions; population density (search for similar items in EconPapers)
JEL-codes: G0 K0 O5 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-afr, nep-ban and nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Working Paper: The African Financial Development Gap (2010)
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