Abstract
This paper aims to analyze the effects of international financial integration on the development of domestic financial system in Sub-Saharan Africa, specifically the banking system over the period 2000-2015. The estimation of parameters by system GMM shows that international financial integration is beneficial to the activity and efficiency of the banking system. Moreover, we don’t find a breakdown in the relationship, considering only the post-financial crisis period. In addition, the withdrawal of South Africa and Mauritius due to their levels of international financial integration and domestic financial development cancels out the significant effect on the activity and efficiency of the banking system. Keywords: International financial integration, domestic financial development, financial crisis, sub-Saharan Africa DOI : 10.7176/JESD/10-18-03 Publication date :September 30 th 2019
Highlights
Sub-Saharan Africa (SSA) hasn’t been left out of the new configuration of global financial system
Sub-Saharan African countries have, in recent decades, embarked on a process of liberalization of their capital accounts in order to reap the benefits of international financial integration
We have analyzed the effects of international financial integration on the development of the domestic financial system
Summary
Sub-Saharan Africa (SSA) hasn’t been left out of the new configuration of global financial system. Kose et al (2006) argue that international financial integration appears to be a real catalyst for the domestic financial system in developing countries The challenge in these countries remains access to diversified financial services, the stability of the financial system through better regulation and supervision, which is facilitated by the establishment of foreign banks and access to international capital markets. 2.2 Some empirical evidence In the empirical literature, very few authors have analyzed the relationship between international financial integration and domestic financial development alone Some of those who have been interested in it are studying the impact of foreign bank penetration on domestic banks, while others are studying the impact of the opening of capital account on the development of stock markets. Model and Econometric Issues We present the econometric model, the variables and the estimation method
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