Financial liberalisation, Banking Crises and Economic Growth in African Countries
AbstractWhile financial liberalisation is considered to be good for economic growth in that it promotes the development of the financial sector, banking crises on the other hand tend to be inimical for economic growth. Moreover, banking crises tend to be preceded by financial liberalisation, as noted in a number of studies. This is because financial liberalisation tends to induce greater risk-taking behaviour by agents, thus leading to banking crises. In this paper we study the effect of financial liberalisation and banking crises on the economic performance of African countries during the period covering 1985 to 2010. Using a treatment effect, two step methods and a panel probit method, our results show that banking crises have a negative impact on economic growth meanwhile financial liberalisation tends to reduce the likelihood of banking crises in African countries.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 41524.
Date of creation: Jun 2012
Date of revision:
O16; O47; G23; O55;
Find related papers by JEL classification:
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
This paper has been announced in the following NEP Reports:
- NEP-AFR-2012-10-06 (Africa)
- NEP-ALL-2012-10-06 (All new papers)
- NEP-DEV-2012-10-06 (Development)
- NEP-FDG-2012-10-06 (Financial Development & Growth)
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