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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 & Odhiambo, Nicholas, 2018. "Information Asymmetry, Financialisation and Financial Access," MPRA Paper 88529, University Library of Munich, Germany.
    2. Asongu, Simplice, 2017. "Improving financial access in Africa: insights from information sharing and financial sector development," MPRA Paper 83071, University Library of Munich, Germany.
    3. 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.
    4. 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.
    5. Meniago, Christelle & Asongu, Simplice A., 2018. "Revisiting the finance-inequality nexus in a panel of African countries," Research in International Business and Finance, Elsevier, vol. 46(C), pages 399-419.
    6. 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.
    7. Asongu, Simplice & Nwachukwu, Jacinta, 2017. "Bank Size, Information Sharing and Financial Access in Africa," MPRA Paper 84046, University Library of Munich, Germany.
    8. 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.
    9. Asongu, Simplice, 2013. "Mobile banking and mobile phone penetration: which is more pro-poor in Africa?," MPRA Paper 56800, University Library of Munich, Germany.
    10. Asongu, Simplice & De Moor, Lieven, 2015. "Recent advances in finance for inclusive development: a survey," MPRA Paper 67299, University Library of Munich, Germany.
    11. 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.
    12. NGUENA Christian-Lambert & NANFOSSO Roger, 2014. "Macroeconomic Factors and Dynamics of Financial Deepening: An empirical Investigation applied to the CEMAC Sub-region," Working Papers of the African Governance and Development Institute. 14/015, African Governance and Development Institute..
    13. 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.
    14. Simplice Asongu & Jacinta C. Nwachukwu, 2017. "ICT, Financial Sector Development and Financial Access," Working Papers of the African Governance and Development Institute. 17/006, African Governance and Development Institute..
    15. Asongu, Simplice & Tchamyou, Vanessa, 2015. "Mobile Phones in Conflicts of Financial Intermediation," MPRA Paper 70242, University Library of Munich, Germany, revised Dec 2015.
    16. Asongu, Simplice, 2015. "Financial development in Africa - a critical examination," MPRA Paper 82131, University Library of Munich, Germany.
    17. Asongu, Simplice, 2014. "Reinventing foreign aid for inclusive and sustainable development: a survey," MPRA Paper 65300, University Library of Munich, Germany.
    18. repec:kap:netnom:v:18:y:2017:i:2:d:10.1007_s11066-017-9119-5 is not listed on IDEAS
    19. repec:taf:jitecd:v:27:y:2018:i:4:p:409-430 is not listed on IDEAS
    20. 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.
    21. 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.
    22. Simplice Asongu & Jacinta C. Nwachukwu, 2017. "Recent finance advances in information technology for inclusive development: a survey," Working Papers of the African Governance and Development Institute. 17/009, African Governance and Development Institute..
    23. Asongu, Simplice & Nnanna, Joseph, 2018. "ICT in Reducing Information Asymmetry for Financial Sector Competition," MPRA Paper 89372, University Library of Munich, Germany.
    24. 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.
    25. Simplice A. Asongu & Jules R. Minkoua N., 2018. "Dynamic openness and finance in Africa," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 27(4), pages 409-430, May.

    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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