The Response of Banking Sector Development to Financial and Trade Openness in the presence of Global Financial Crisis in Africa

Olaronke Onanuga () and Abayomi Onanuga

MPRA Paper from University Library of Munich, Germany

Abstract: Africa’s financial system is strongly bank-based and so this paper investigate whether economic growth, financial openness and trade openness contribute to the development of the banking sector in the presence and absence of global financial crisis. The results from PMG/ARDL suggest that banking sector develops independently of economic growth in lower-middle and high income countries while it develops as demand for finance increases in low and uppermiddle income countries in Africa. Being cautious of global financial crisis, trade openness is found to be more effective in high and lower-middle income countries, financial openness is more effective in low income countries and neither is more effective in upper-middle income countries. It is also discovered that, in the long run, global financial crisis generally reduce banking sector development in Africa but not in high income countries however the banking sectors of lower-middle and low income countries suffer the most from such crisis.

Keywords: Financial Openness; Trade Openness; Banking Sector Development; Global Financial Crisis; Africa; Income group (search for similar items in EconPapers)
JEL-codes: F01 F21 G01 G21 (search for similar items in EconPapers)
Date: 2016-05-30, Revised 2016-09-30
New Economics Papers: this item is included in nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in The Botswana Journal of Economics 1.14(2016): pp. 93-117

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:83327

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