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Liberalisation and Financial Sector Competition: A Critical Contribution to the Empirics with an African Assessment

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  • Simplice Asongu

Abstract

This paper investigates how financial, trade, institutional and political liberalisation policies have affected financial sector competition in Africa using updated data to appraise second-generation reforms. The “freedom to trade” and “economic freedom” indices are employed. Hitherto, unexplored financial sector concepts of formalisation, semi-formalisation, informalisation and non-formalisation are also introduced. The following findings are established. First, relative to money supply, (i) with the exception of the economic freedom mechanism, liberalisation policies have generally decreased the growth of the formal financial sector to the benefit of other financial sectors; (ii) apart from the foreign direct investment and economic freedom channels, liberalisation policies have been fruitful for semi-formal financial development at the cost of other financial sectors and; (iii) with the exception of economic freedom, both the informal and non-formal sectors have developed owing to liberalisation to the detriment of the formal financial sector. Second, relative to gross domestic product, the semi-formal, informal and/or non-formal financial sectors have also generally improved as a result of liberalisation. Policy implications are discussed.

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  • Simplice Asongu, 2015. "Liberalisation and Financial Sector Competition: A Critical Contribution to the Empirics with an African Assessment," South African Journal of Economics, Economic Society of South Africa, vol. 83(3), pages 425-451, September.
  • Handle: RePEc:bla:sajeco:v:83:y:2015:i:3:p:425-451
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    Cited by:

    1. Asongu, Simplice, 2017. "Improving financial access in Africa: insights from information sharing and financial sector development," MPRA Paper 83071, University Library of Munich, Germany.
    2. Batuo, Michael & Mlambo, Kupukile & Asongu, Simplice, 2018. "Linkages between financial development, financial instability, financial liberalisation and economic growth in Africa," Research in International Business and Finance, Elsevier, vol. 45(C), pages 168-179.
    3. Asongu, Simplice & De Moor, Lieven, 2015. "Recent advances in finance for inclusive development: a survey," MPRA Paper 67299, University Library of Munich, Germany.
    4. Asongu, Simplice & Nwachukwu, Jacinta, 2017. "ICT, Financial Sector Development and Financial Access," MPRA Paper 78863, University Library of Munich, Germany.
    5. Simplice A. Asongu, 2014. "Knowledge Economy and Financial Sector Competition in African Countries," African Development Review, African Development Bank, vol. 26(2), pages 333-346, June.
    6. Simplice A. Asongu, 2015. "May the Soul of the IFS Financial System Definition RIP in Developing Countries," The International Journal of Economic Behavior - IJEB, Faculty of Business and Administration, University of Bucharest, vol. 5(1), pages 15-30, December.
    7. Simplice A. Asongu, 2014. "New Financial Development Indicators: With a Critical Contribution to Inequality Empirics," The International Journal of Economic Behavior - IJEB, Faculty of Business and Administration, University of Bucharest, vol. 4(1), pages 33-50.
    8. Simplice A. Asongu & Paul N. Acha-Anyi, 2017. "ICT, conflicts in financial intermediation and financial access: evidence of synergy and threshold effects," Netnomics, Springer, vol. 18(2), pages 131-168, December.
    9. repec:taf:wjabxx:v:18:y:2017:i:1:p:24-49 is not listed on IDEAS
    10. Asongu, Simplice & Nwachukwu, Jacinta, 2017. "Bank Size, Information Sharing and Financial Access in Africa," MPRA Paper 84046, University Library of Munich, Germany.
    11. Simplice Asongu, 2016. "Reinventing Foreign Aid For Inclusive And Sustainable Development: Kuznets, Piketty And The Great Policy Reversal," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 736-755, September.
    12. repec:eme:jfeppp:jfep-11-2016-0087 is not listed on IDEAS
    13. Christelle Meniago & Simplice Asongu, 2018. "Revisiting the Finance-Inequality Nexus in a Panel of African Countries," Working Papers 18/014, African Governance and Development Institute..
    14. Asongu, Simplice A. & Nwachukwu, Jacinta C., 2017. "The synergy of financial sector development and information sharing in financial access: Propositions and empirical evidence," Research in International Business and Finance, Elsevier, vol. 40(C), pages 242-258.
    15. Asongu, Simplice & Minkoua N., Jules, 2017. "Dynamic Openness and Finance in Africa," MPRA Paper 83220, University Library of Munich, Germany.
    16. Simplice Asongu & Vanessa Tchamyou, 2015. "Mobile Phones in Conflicts of Financial Intermediation," Working Papers 15/050, African Governance and Development Institute..
    17. Simplice Asongu & Jacinta Nwachukwu, 2017. "Information asymmetry and conditional financial sector development," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 9(4), pages 372-392, November.
    18. Asongu, Simplice, 2013. "Mobile banking and mobile phone penetration: which is more pro-poor in Africa?," MPRA Paper 56800, University Library of Munich, Germany.
    19. NGUENA Christian-Lambert & NANFOSSO Roger, 2014. "Macroeconomic Factors and Dynamics of Financial Deepening: An empirical Investigation applied to the CEMAC Sub-region," Working Papers 14/015, African Governance and Development Institute..
    20. Simplice Asongu & Nicholas Odhiambo, 2018. "Information Asymmetry, Financialisation and Financial Access," Working Papers 18/019, African Governance and Development Institute..
    21. Vanessa S. Tchamyou & Simplice A. Asongu, 2017. "Information Sharing and Financial Sector Development in Africa," Journal of African Business, Taylor & Francis Journals, vol. 18(1), pages 24-49, January.
    22. Simplice Asongu, 2014. "Reinventing foreign aid for inclusive and sustainable development: a survey," Working Papers 14/033, African Governance and Development Institute..
    23. Asongu, Simplice A & Odhiambo, Nicholas M., 2018. "Information asymmetry, financialisation and financial access," Working Papers 23931, University of South Africa, Department of Economics.
    24. Simplice Asongu & Jacinta C. Nwachukwu, 2017. "Recent finance advances in information technology for inclusive development: a survey," Working Papers 17/009, African Governance and Development Institute..

    More about this item

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • F30 - International Economics - - International Finance - - - General
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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