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Institutional Factors and Financial Sector Development

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  • Hovhannes Toroyan
  • George C. Anayiotos
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    Abstract

    The paper assesses the effects of certain institutional factors on financial sector development in Sub- Saharan Africa (SSA). Data Envelopment Analysis (DEA) is applied to determine the extent to which these institutions affect the financial sector, and to suggest which institutions play a more critical role in each country. Results suggest that institutional factors affect financial depth and access to financial services more than asset quality and profitability (measured by nonperforming loans (NPL) and return on equity (ROE). The results also suggest that depth of credit information has the strongest influence on the NPL ratio, and political stability affects access the most. Based on model findings, policy implications on prioritizing institutional reforms to enhance financial sector development are suggested for individual countries and for country groups.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 09/258.

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    Length: 25
    Date of creation: 01 Nov 2009
    Date of revision:
    Handle: RePEc:imf:imfwpa:09/258

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    Related research

    Keywords: Access to capital markets; Data analysis; Data quality assessment framework; Economic models; Financial institutions; Governance; financial sector; financial sector development; financial services; financial system; financial markets; financial economics; financial intermediation; financial liberalization; financial structure; stock market; deposit money; equity market; deposit money banks; financial resources; financial market; money market; foreign bank; financial dependence; stock market development; financial intermediaries; international financial liberalization;

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    References

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    Cited by:
    1. Barry, Thierno Amadou & Tacneng, Ruth, 2014. "The Impact of Governance and Institutional Quality on MFI Outreach and Financial Performance in Sub-Saharan Africa," World Development, Elsevier, vol. 58(C), pages 1-20.
    2. George Anayiotos & Hovhannes Toroyan & Athanasios Vamvakidis, 2010. "The efficiency of emerging Europe’s banking sector before and after the recent economic crisis," Financial Theory and Practice, Institute of Public Finance, vol. 34(3), pages 247-267.
    3. Justin Bem & Pierre Joubert Nguetse Tegoum & Tatiana Morel Samo Tcheeko & Jacksone Essoh, 2013. "Efficience de production du secteur informel non-agricole et réduction de la pauvreté au Cameroun," Working Papers PMMA 2013-06, PEP-PMMA.

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