Abstract
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.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
