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Financial Services and Economic Development in Africa-super- 1

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  • Mthuli Ncube

Abstract

This paper reviews the various ways in which the financial sector could impact on economic growth and development and in the process makes reference to some theoretical underpinnings. We present the structure and characteristics of financial systems in Africa. The main characteristics of financial systems in Africa that may affect economic development include weak regulation environment, weak legal systems, bankdominated financial systems, wide interest rate spreads, poor corporate governance practices, inadequate design of deposit-safety nets, oligopolistic banking sector, absence of financial innovation, inefficient payment and clearing systems, small and shallow stock markets, market fragmentation and informal financial channels and generally low levels of financial deepening. These characteristics influence the impact of financial services on economic growth and development. Policy-makers are challenged to enact policies that mitigate against the distortionary effects of these characteristics in order to promote economic growth and development. Copyright The author 2007. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

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  • Mthuli Ncube, 0. "Financial Services and Economic Development in Africa-super- 1," Journal of African Economies, Centre for the Study of African Economies, vol. 16(suppl_1), pages -57.
    • Handle: RePEc:oup:jafrec:v:16:y::i:suppl_1:p:-57
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    File URL: http://hdl.handle.net/10.1093/jae/ejm025
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    Cited by:

    1. Gries, Thomas & Kraft, Manfred & Meierrieks, Daniel, 2009. "Linkages Between Financial Deepening, Trade Openness, and Economic Development: Causality Evidence from Sub-Saharan Africa," World Development, Elsevier, vol. 37(12), pages 1849-1860, December.
    2. Eléazar Zerbo, 2015. "What determines the long-run growth in Sub-Saharan Africa? Exploring the role of energy, trade openness and financial development in six countries," Working Papers hal-01238524, HAL.
    3. Oyebola Fatima Etudaiye-Muhtar & Oyebola Fatima Etudaiye-Muhtar & Rubi Ahmad, 2015. "Empirical Evidence of Target Leverage, Adjustment Costs and Adjustment Speed of Non-Financial Firms in Selected African Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 482-488.

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