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Spatial Externaltiy, Openness and Financial Development in Sub-Saharan Africa (SSA) Countries

Author

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  • Hakeem Mobolaji

    (Fountain University)

Abstract

This paper investigates the impact of a spatial variable on financial development in SSA for the period of 1970-2005. It is a dynamic panel data model that uses Arellano and Bond GMM estimation. The spatial variable is the financial development in South Africa interacted with the ratio of distance from the other SSA countries. The paper finds that financial development is geographically sensitive, and thus not immune to spatial externality. The study indicates that there is a spatial benefit (cost) associated with financial development (underdevelopment).To confirm the robustness of our findings, we conduct cointegration test to assess whether or not the spatial variable has any long-run impact on financial development in particular and on economic growth in general. In all, we find statistical evidence that financial development exhibits spatial externality among SSA countries.

Suggested Citation

  • Hakeem Mobolaji, 2010. "Spatial Externaltiy, Openness and Financial Development in Sub-Saharan Africa (SSA) Countries," The African Finance Journal, Africagrowth Institute, vol. 12(1), pages 53-71.
    • Handle: RePEc:afj:journl:v:12:y:2010:i:1:p:53-71
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    Cited by:

    1. Alex Bara & Pierre Le Roux, 2017. "South Africa's Financial Spillover Effects on Growth and Financial Development in the Southern African Development Community," International Journal of Economics and Financial Issues, Econjournals, vol. 7(5), pages 400-412.

    More about this item

    Keywords

    Banks; Externalities; Economic Development and Africa;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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