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Financial Deepening Dynamics and Implication for Financial Policy Coordination in a Monetary Union: the case of WAEMU

Listed author(s):
  • Christian Lambert Nguena

    ()

    (Association of African Young Economists)

  • Roger Tsafack Nanfosso

    ()

    (Econimic Policy Management Program)

This article aims to investigate the implication of financial deepening dynamics for financial policy coordination in the WAEMU sub-region. For this purpose we adopted a hypothetical-deductive theoretical approach and an empirical investigation in bothstatic and dynamic panel data econometrics that has allowed us to identify some stylized facts on this issue and have led to the following global recommendations based on our empirical investigation: The converging dynamics is evident in the sub-region and implies that after five years, financial policies harmonization would have an optimal impact; This highlights the feasibility of common effectiveness monetary policy targeting indirectly financial depth in the sub-region; However member states should work within five years towards harmonizing cross-country differences in structural and institutional characteristics that hamper the effectiveness of financial policies. Especially they should implement a financial policy whose mainly aim to increase the level of savings rate, GDP per capita growth rate and density and reduce the level of reserves in the sub-region.

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File URL: http://aaye.org/dmdocuments/AAYE_PR_WPS_N5.pdf
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Paper provided by Association of African Young Economists in its series AAYE Policy Research Working Paper Series with number 13_005.

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Length: 20 pages
Date of creation: Jul 2013
Date of revision: Nov 2013
Handle: RePEc:aay:wpaper:13_005
Contact details of provider: Web page: http://www.aaye.org/
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