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Dynamic Openness and Finance in Africa

Simplice Asongu () and Jules Minkoua N.

MPRA Paper from University Library of Munich, Germany

Abstract: This study assesses dynamics of openness and finance in Africa by integrating financial development dynamics of depth, activity and size in the assessment of how financial, trade, institutional, political and other openness policies (of second generation structural and institutional reforms) have affected financial development. The empirical evidence is based on Generalized Method of Moments with data from 28 African countries for the period 1996-2010. The following findings are established. (i) While the de jure (KAOPEN) indicator of financial openness improves financial depth, the de facto (FDI) measurement decreases it, with the effect of the latter measure positive on financial size. (ii) Whereas trade openness improves financial depth, its effect on financial activity and size is negative. (iii) Institutional openness has a positive effect on financial dynamics of depth and activity, while its effect on financial size is negative. (iv) Political openness and economic freedom are detrimental to financial depth and activity. Justifications for these nexuses are discussed.

Keywords: Banking; Trade; Institutions; Politics; Africa (search for similar items in EconPapers)
JEL-codes: E50 G20 O16 O17 O55 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-afr, nep-int and nep-mac
Date: 2017-01
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Related works:
Journal Article: Dynamic openness and finance in Africa (2018) Downloads
Working Paper: Dynamic Openness and Finance in Africa (2017) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:83220

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