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Globalization, financial allocation efficiency and regional economic dynamics: asymmetric panel evidence from Africa

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  • Simplice A., Asongu

Abstract

This paper examines how regionalization in the face of globalization has affected financial development in the context of banking system efficiency in Africa. Results which are robust to financial system efficiency and growth-led-finance nexus reveal that in the post-regionalization era: (1) UEMOA and CEMAC regional banks’ ability to finance credit by deposits has reduced; (2) financial institutions of COMESA have improved their capacity to fund openness related activities/projects with deposits; (3) increase in welfare has positively affected the intermediary role of banks; (4) globalization tends to be more detrimental to financial systems of ‘economic and monetary’ regions than to those of purely economic regions. As a policy implication, national and regional authorities should gain knowledge of the fact that with openness, the role of domestic and regional banks seems to lessen in the funding of openness related activities and projects. Much needs to be done on the improvement of infrastructure that curtails information asymmetry in the banking industry.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 33901.

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Date of creation: 19 Sep 2011
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Handle: RePEc:pra:mprapa:33901

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Keywords: Globalization; Financial Development; Regional Integration; Panel; Africa;

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  1. Thomas Gries & Manfred Kraft & Daniel Meierrieks, 2008. "Linkages between Financial Deepening,Trade Openness and Economic Development: Causality Evidence from Sub-Saharan Africa," Working Papers CIE 15, University of Paderborn, CIE Center for International Economics.
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  3. Manole, Vlad & Spatareanu, Mariana, 2010. "Trade openness and income -- A re-examination," Economics Letters, Elsevier, Elsevier, vol. 106(1), pages 1-3, January.
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  12. Wacziarg, Romain & Welch, Karen Horn, 2003. "Trade Liberalization and Growth: New Evidence," Research Papers, Stanford University, Graduate School of Business 1826, Stanford University, Graduate School of Business.
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Cited by:
  1. Simplice A, Asongu, 2012. "Are financial benefits of financial globalization questionable until greater domestic financial development has taken place?," MPRA Paper 37631, University Library of Munich, Germany.

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