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African Financial Development Dynamics: Big Time Convergence

  • Asongu Simplice



Purpose - Assessment of African financial development dynamic convergences in money, credit, efficiency and size. Design/Methodology - The empirical evidence is premised on 11 homogenous panels based on regions (Sub-Saharan and North Africa), income-levels (low, middle, lower-middle and upper-middle), legal-origins (English common-law and French civil-law) and religious dominations (Christianity and Islam). We examine convergence in financial intermediary dynamics of depth, efficiency, activity and size. Findings - Findings suggest that countries with small-sized financial intermediary depth, efficiency, activity and size are catching-up countries with large-sized financial intermediary depth, efficiency, activity and size respectively. We also provide the speeds of convergence and time necessary to achieve a full (100%) convergence. Practical implications - The presence of strong links among African banking sectors may present little opportunity for portfolio diversification. The convergence patterns show positive steps towards regional integration. As a policy implication, African governments should not relent in structural and institutional reforms. Originality/value - It is the first critical assessment of convergence in financial intermediary development dynamics in the African continent.

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Paper provided by African Governance and Development Institute. in its series Working Papers with number 12/003.

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Length: 47
Date of creation: 19 Jan 2012
Date of revision:
Publication status: Forthcoming in African Journal of Economics and Management Studies
Handle: RePEc:agd:wpaper:12/003
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