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How Can Economic and Political Liberalisation Improve Financial Development in African Countries?

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  • Enowbi Batuo, Michael
  • Kupukile, Mlambo

Abstract

The objective of this paper is to study the interactions between economic liberalisation, political liberalisation and financial development in African countries. More specifically, we seek to establish the impact of economic, political and institutional openness on financial deepening. The empirical approach will be two-step procedure, first using a difference in difference method to show the various aspect of financial liberalisation on economic and political freedom while the second step will be using panel data techniques from period 1990 to 2005. The estimation results can be summarised as the following, first, Economic and financial liberalisation did account significantly for the financial development performance. While political stability show a positive overall effect on financial development, the association with Political freedom is consistent only after controlling the endogeneity of Political freedom on financial development. This result indicates that the transformation of the political and economic environment has improved the performance of the financial sector.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 20651.

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Date of creation: Oct 2009
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Handle: RePEc:pra:mprapa:20651

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Keywords: Political Liberalisation; Economic Liberalisation; Financial Development and Africa;

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Cited by:
  1. R.W. Hafer, 2013. "Economic Freedom and Financial Development: International Evidence," Cato Journal, Cato Journal, Cato Institute, vol. 33(1), pages 111-126, Winter.
  2. Batuo Enowbi, Michael & Kupukile, Mlambo, 2012. "Financial instability, financial openness and economic growth in african countries," MPRA Paper 43340, University Library of Munich, Germany.
  3. Enowbi Batuo, Michael & Asongu, Simplice A., 2012. "The impact of liberalisation policies on income inequality in african countries," MPRA Paper 43344, University Library of Munich, Germany.

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