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How has politico-economic liberalization affected financial allocation efficiency? Fresh African evidence

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  • Asongu, Simplice A

Abstract

This paper investigates how financial, trade, institutional and political liberalization policies have affected financial efficiency in Africa. It uses updated data to appraise second generation reforms in order to gather fresh evidence and derive more updated policy implications. The ‘freedom to trade’ and ‘economic freedom’ indices are also employed. The following findings are established. (1) Financial liberalization mitigates financial allocation efficiency, with the magnitude of the de jure indicator (KAOPEN) higher than that of the de facto measurement (FDI). (2) Exports significantly improve financial efficiency. (3) Institutional liberalization has a positive effect on the efficiency of allocation while the effect of political liberalization is not significant. (4) Freedom of trade decreases (improves) financial (banking) system efficiency. (5) Economic freedom facilitates the transformation of mobilized financial resources (deposits) into credit for economic operators. Justifications for these nexuses are provided.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 44995.

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Date of creation: 03 Jan 2013
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Publication status: Published in Economics Bulletin 1.33(2013): pp. 663-676
Handle: RePEc:pra:mprapa:44995

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Keywords: Liberalization policies; Capital allocation; Africa;

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Citations

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Cited by:
  1. Asongu Simplice, 2014. "Fresh Patterns of Liberalization, Bank Return and Return Uncertainty in Africa," Working Papers 14/004, African Governance and Development Institute..
  2. Asongu, Simplice A, 2013. "Liberalization and financial sector competition: a critical contribution to the empirics with an African assessment," MPRA Paper 52212, University Library of Munich, Germany.
  3. Asongu Simplice, 2013. "Inequality, poverty and quality of institutions: which freedom channels of globalization matter for Africa?," Working Papers 13/014, African Governance and Development Institute..
  4. Akpan, Uduak & Isihak, Salisu & Asongu, Simplice, 2014. "Determinants of Foreign Direct Investment in Fast-Growing Economies: A Study of BRICS and MINT," MPRA Paper 56810, University Library of Munich, Germany.
  5. Asongu Simplice, 2014. "On the substitution of institutions and finance in investment," Working Papers 14/005, African Governance and Development Institute..
  6. NGUENA, Christian L., 2012. "Pro Growth Monetary Policy in Africa: Monetarist versus Keynesian Approach," MPRA Paper 49410, University Library of Munich, Germany, revised 31 Aug 2013.
  7. Nguena, Christian Lambert, 2010. "Rethinking Pro-Growth Monetary Policy in Africa: Monetarist versus Keynesian Approach," MPRA Paper 52100, University Library of Munich, Germany, revised 08 Dec 2013.

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